US Global Jets index (JETS)

Key Updates

JETS declined 4.46% to $24.23 since the March 6th report, marking the sixth consecutive session of losses and establishing a new multi-month low. The ETF has now lost 22.26% over the past month as Middle East conflict escalates dramatically, with Iran closing the Strait of Hormuz—a critical passage for one-fifth of global oil supplies. Jet fuel prices have surged from approximately $2 per gallon to over $4 per gallon in the past week, representing a near-doubling of this critical cost component that accounts for up to 30% of airline operating expenses. The investment thesis has significantly deteriorated as geopolitical risks have materialized into tangible operational disruptions, with major Middle Eastern aviation hubs in Dubai and Doha forced to close, affecting approximately 90,000 daily transiting passengers.

Current Trend

JETS has declined 13.70% year-to-date through March 9th, establishing a clear downtrend with accelerating momentum. The ETF has fallen 22.26% over the past month and 12.55% in the last five days alone, indicating intensifying selling pressure. The current price of $24.23 represents a breakdown from previous support levels as the index tests lows not seen since late 2025. The Dow Jones U.S. Airline Index has declined 12% over the past five days, underperforming the S&P 500's 1.9% loss during the same period. Six consecutive days of losses signal strong bearish momentum with no immediate technical support visible at current levels.

Investment Thesis

The investment thesis for airline exposure has fundamentally shifted from demand recovery concerns to acute supply-side cost shock. Airlines face a dual crisis: jet fuel costs have doubled in one week while simultaneously experiencing route disruptions from Middle Eastern airport closures. The lack of fuel hedging among U.S. carriers—a practice largely abandoned over the past two decades—leaves the sector fully exposed to price volatility. The four largest U.S. airlines could face a combined $5.8 billion in additional fuel costs if current elevated prices persist throughout the year. Premium carriers like Delta and United may demonstrate relative resilience through their ability to pass costs to higher-income travelers, while budget carriers serving price-sensitive domestic markets face severe margin compression. The conflict's duration remains uncertain, with analysts warning that fuel shortages could trigger flight cancellations or delays within weeks if the Strait of Hormuz remains closed.

Thesis Status

The investment thesis has deteriorated significantly since the previous report. What began as elevated fuel cost concerns has evolved into a full-scale operational crisis with Iran's closure of the Strait of Hormuz. The previous report identified fuel price sensitivity as the primary risk; this risk has now materialized with prices doubling and no near-term resolution visible. TD Cowen's estimate that United Airlines' Q1 EPS could fall to just 5-22 cents—well below the January forecast of $1.00-$1.50—illustrates the magnitude of earnings impact. The closure of Dubai and Doha aviation hubs adds operational complexity beyond pure cost pressures, affecting both passenger flows and cargo operations. Historical patterns suggest weather-related selloffs recover quickly, but geopolitical disruptions carry extended timelines with uncertain resolution paths. The sector now faces potential flight cancellations within weeks if fuel shortages materialize, representing a shift from margin pressure to operational viability concerns.

Key Drivers

Jet fuel prices surging from $2 to over $4 per gallon represent the primary driver, with spot fuel reaching $4.12 per gallon at the U.S. Gulf Coast, the highest level since June 2022. Iran's closure of the Strait of Hormuz—a passage for one-fifth of global oil supplies—has created immediate supply constraints. United Airlines CEO warned that higher airfares could begin quickly in response to these cost pressures. The closure of major Middle Eastern aviation hubs in Dubai and Doha disrupts approximately 90,000 daily transiting passengers and cargo operations. American Airlines faces a 25% swing in EPS for every 10-cent change in fuel costs per gallon, highlighting operational leverage to fuel prices. The absence of fuel hedging leaves carriers fully exposed, with each one-cent increase costing Delta $40 million, American $50 million, and Southwest $22 million annually.

Technical Analysis

JETS exhibits severe technical deterioration with six consecutive down sessions and accelerating downside momentum. The 4.46% single-session decline to $24.23 establishes a new multi-month low, breaking below previous support levels. The 1-month decline of 22.26% significantly exceeds the 6-month decline of 6.00%, indicating acceleration in selling pressure rather than gradual deterioration. Short-term momentum indicators are deeply oversold with the 5-day decline of 12.55% representing capitulation-level selling. Volume patterns suggest institutional distribution as the ETF underperforms broader market indices. The current price action shows no visible support levels, with the next potential floor dependent on geopolitical developments rather than technical factors. Relative strength versus the S&P 500 has collapsed, with JETS declining 12.55% over five days versus the broader market's 1.9% loss, indicating sector-specific rather than market-wide pressure.

Bull Case

• Premium carriers maintain pricing power: Delta and United may pass costs to higher-income travelers in the current K-shaped demand environment, protecting margins better than budget carriers.
• Rapid fare adjustment capability: United Airlines CEO indicated higher airfares could start quickly, enabling near-term margin recovery through pricing actions.
• Historical weather-related recovery patterns: The U.S. Global Jets ETF recovered within days following a similar storm in late January, suggesting resilience to temporary disruptions.
• Long-term sector performance: Over the past 12 months, the Jets ETF gained 16%, outperforming the S&P 500's 14% advance, demonstrating underlying sector strength.
• Strategic investor interest: Causeway Capital raised its stake in Wizz Air from 2.04% to 5.04%, indicating institutional confidence in valuation levels despite near-term headwinds.

Bear Case

• Unprecedented fuel cost shock without hedging protection: The four largest U.S. airlines could face a combined $5.8 billion in additional fuel costs if current elevated prices persist, with no hedging mitigation available.
• Severe earnings revision risk: TD Cowen estimates United Airlines' Q1 EPS could fall to just 5-22 cents at current fuel prices, well below the January forecast of $1.00-$1.50, indicating potential 80-95% earnings decline.
• Critical infrastructure closure disrupting global connectivity: Major Middle Eastern aviation hubs in Dubai and Doha forced to close, affecting approximately 90,000 transiting passengers daily, with extended recovery timelines.
• Disproportionate vulnerability of budget carriers: American Airlines, JetBlue, Allegiant, and Frontier identified as most at-risk carriers operating with lower margins and higher fuel expenses as percentage of revenue.
• Imminent operational disruption risk: Industry analysts warn that fuel shortages could lead to flight cancellations or delays within weeks, threatening operational continuity beyond margin pressure.