US Global Jets index (JETS)

Key Updates

JETS declined 2.78% to $25.36 in the current session, extending the selloff to five consecutive trading days and establishing a fresh multi-week low. The deterioration accelerates as geopolitical tensions in the Middle East continue to drive jet fuel prices higher, with spot fuel reaching $4.12 per gallon—the highest since June 2022. Reuters reports that major U.S. carriers face a combined $5.8 billion in additional fuel costs if elevated prices persist throughout 2026, with airlines now fully exposed due to the abandonment of hedging programs. The ETF has declined 9.67% year-to-date and 14.94% over the past month, reflecting severe margin compression concerns as fuel represents 17-21% of operating expenses for major carriers.

Current Trend

JETS is in a confirmed downtrend with accelerating negative momentum. The ETF has fallen 10.88% over five trading days, breaking below the $26.45 support level established on March 3rd and now trading at $25.36. Year-to-date performance of -9.67% significantly underperforms broader market indices. The 14.94% monthly decline represents capitulation selling as the Iran conflict's impact on fuel costs becomes quantifiable. The ETF has established consecutive lower lows over the past week ($27.43 → $26.73 → $26.08 → $25.36), with no technical support visible until the $24-25 range. Volume patterns suggest institutional distribution as investors reassess airline valuations in light of sustained fuel cost pressures.

Investment Thesis

The investment thesis for JETS centers on airline industry recovery and normalized operating margins following pandemic disruptions. However, this thesis faces critical challenges from geopolitical fuel cost shocks that airlines cannot hedge against. The abandonment of fuel hedging programs by major carriers—including Southwest's termination in 2025—leaves the sector with full exposure to commodity price volatility. Citi analysts identify American Airlines, JetBlue, Allegiant, and Frontier as most vulnerable due to lower margins and higher fuel expense ratios, while Delta and United demonstrate relative resilience through premium product positioning. The thesis requires stable fuel costs, robust travel demand, and operational efficiency—conditions currently undermined by Middle Eastern conflict disruptions.

Thesis Status

The investment thesis has materially deteriorated since the March 5th report. The quantification of fuel cost exposure represents a significant negative development: Reuters analysis shows TD Cowen estimates United's Q1 EPS could fall to just 5-22 cents versus January guidance of $1.00-$1.50. Each one-cent increase in jet fuel costs Delta $40 million, American $50 million, and Southwest $22 million annually. The 48-cent per gallon fuel price surge over the past week—equivalent to a $20 per barrel move—directly threatens profitability across the sector. While previous reports noted temporary disruptions from airspace closures, the current situation reveals structural vulnerability: airlines cannot pass through costs quickly enough to offset margin compression, particularly for carriers serving price-sensitive leisure travelers. The thesis requires reassessment pending fuel price stabilization and evidence of pricing power.

Key Drivers

Jet fuel prices surged 15% in the past week to $4.12 per gallon at the U.S. Gulf Coast, the highest level since June 2022, following U.S.-Israel strikes on Iran. The absence of fuel hedging programs across major U.S. carriers creates direct margin exposure, with the four largest airlines facing a combined $5.8 billion in additional costs if elevated prices persist. Singapore jet fuel prices have risen significantly, impacting global aviation costs. Citi's vulnerability analysis highlights differentiated exposure across carriers, with low-cost carriers facing disproportionate pressure. Operational disruptions continue as over 21,300 flights have been cancelled at major Gulf hubs since strikes began, though this represents a secondary concern compared to fuel cost inflation.

Technical Analysis

JETS is trading at $25.36, down 2.78% in the current session and establishing a new multi-week low. The ETF has broken critical support at $26.45 (March 3rd low) and $26.08 (March 5th close), confirming downtrend acceleration. The five-day decline of 10.88% represents the steepest selloff since the initial conflict-related drop. No meaningful support exists until the $24-25 range based on recent trading patterns. Resistance has formed at $26.08, $26.73, and $27.43—each representing previous session closes that now serve as overhead supply. The 14.94% monthly decline and 9.67% year-to-date loss demonstrate sustained distribution pressure. Volume analysis suggests institutional selling rather than panic liquidation, indicating methodical position reduction as earnings estimates decline. The technical structure offers no bullish signals, with momentum indicators pointing to further downside risk absent fundamental catalysts.

Bull Case

• Delta's order for 34 additional Airbus A321neo jets, bringing total 2026 orders to nearly 100 aircraft, demonstrates confidence in long-term demand recovery and fleet modernization strategies that position premium carriers for market share gains
• Delta and United's lower fuel sensitivity due to higher profit margins and premium product positioning creates defensive characteristics, enabling better cost pass-through to corporate and high-end leisure travelers
• Airlines serving premium and corporate travelers may successfully pass elevated costs to consumers, protecting margins for carriers with differentiated product offerings and strong loyalty programs
• Historical precedent from January and February snowstorms shows the U.S. Global Jets ETF recovered within days following weather-related selloffs, with the ETF gaining 19.6% over the past 12 months versus S&P 500's 14.9%, suggesting resilience to temporary disruptions
• Innovation in aviation asset financing through tokenization of jet engines valued at $12.2 million demonstrates emerging capital formation mechanisms that could improve industry liquidity and asset utilization rates

Bear Case

• Combined $5.8 billion in additional fuel costs for the four largest U.S. airlines if current elevated prices persist, with TD Cowen estimating United's Q1 EPS could fall to 5-22 cents versus $1.00-$1.50 guidance—representing 78-95% earnings collapse
• Complete absence of fuel hedging protection across major U.S. carriers following Southwest's program termination in 2025, creating unprecedented direct exposure to commodity volatility with each one-cent fuel increase costing Delta $40M, American $50M, and Southwest $22M annually
• American Airlines, JetBlue, Allegiant, and Frontier identified as most vulnerable due to lower operating margins and higher fuel expenses as percentage of revenue, with these carriers representing significant JETS ETF weightings
• Over 21,300 flights cancelled at major Gulf hubs with oil prices surging 30% year-to-date, creating dual headwinds from reduced connectivity and elevated costs, with analysts noting this represents the biggest aviation shutdown since COVID-19
• Jet fuel prices at $4.12 per gallon—highest since June 2022—with crude oil reaching highest settlement since July 2024 and potential for further escalation if Middle East production disruptions intensify or storage capacity constraints force shut-ins