Spain's airline association ALA warned Monday that carriers enter maximum uncertainty for next summer as fuel hedges fall toward 15–40% from 70–80% today, while jet-fuel crack spreads remain far above pre–Iran-war levels; winter seat capacity still grows 5.5% to a record 145.6 million seats, but ALA expects route cuts and fare pressure as kerosene costs outrun margins.
Monday, October 26 — Spanish airlines are advertising a record winter and bracing for a summer they cannot price. Javier Gándara, president of ALA (the airline association) and an easyJet executive, told Madrid press that uncertainty is “maximum” for summer 2027 because fuel hedges that cushioned 2026 are rolling off while kerosene still trades at roughly double pre–Iran war levels. The quote lands after a season that looked like a supply crisis but behaved like a margin crisis: planes flew, tourists arrived, and fuel bills wrecked earnings.
Supply held; cracks did the damage
The fear in spring 2026 was empty tanks, not empty seats. Repsol, Moeve, and BP warned Madrid that jet supply was not fully guaranteed for peak summer. Spain answered with 90-day strategic stocks, local refining covering 80–85% of kerosene needs, and a surge of U.S. jet exports — nearly 190,000 tonnes from April through June, including a 100,000-tonne June cargo that alone covered more than 15% of monthly Spanish aviation demand, per Cores data cited by El País.
By August, elDiario.es reported carriers operating normally with stocks intact; only 11% of Spanish jet fuel came from the Middle East, limiting direct Hormuz exposure. Physical scarcity never materialized on the apron. Financial scarcity did: IATA warned global airline profit could halve in 2026 as jet fuel rose ~70%, crushing margins from 4.2% toward 2%.
The binding variable is the crack spread — jet versus crude — not crude alone. Expansion noted in June that even with Ormuz tensions easing, airlines still faced jet at least 20% above pre-war futures, with one-year forwards near $800/tonne versus ~$670 before February 28. ALA on Monday highlighted a “skyrocketing” differential between kerosene and crude. Refineries captured the rent when middle distillates tightened; Culled tracked the same product-versus-crude split in China’s export halt and European diesel releases.
Hedging cliffs and summer 2027 tickets
Hedges turned 2026 into a managed disaster. IAG covered ~75% of Q2 consumption near $1,065/tonne and still reported profit down >20% in the first half; it guided ~70% coverage for the rest of 2026 at €8.6 billion of fuel cost. Lufthansa hedged >85% of remaining 2026 needs yet booked €750 million of fuel pain in H1. Ryanair entered winter with only ~15% of 2027 volume capped near $85/bbl equivalents while spot doubled.
ALA’s Monday numbers are the industry-wide version: hedges at 70–80% today fall to 15–40% heading into next summer. Gándara called it the most uncertain summer since COVID. Ryanair’s Michael O’Leary went further on October 20, warning of the largest European fare increases on record — up to 20% for summer 2027 — and urging early booking while insisting margins would still shrink because fares would not fully pass through fuel.
Ticket math is therefore bifurcated:
| Carrier profile | 2027 exposure |
|---|---|
| Legacy groups with layered hedges (IAG, Air France-KLM) | Partially locked prices into 2027; spot still hurts on uncovered tons |
| Ultra-low-cost with thin books (Ryanair, parts of easyJet) | Spot jet flows straight to yield and capacity decisions |
| Regionals and leisure charters | Weakest balance sheets; first to cut marginal routes |
ALA still forecasts +5.5% winter seats (145.6 million) in Spain — a record — but warns schedules may shrink if kerosene stays elevated. Summer 2026 already showed passenger growth (4.4%) lagging flight growth (4.7%), a softness Gándara tied to fuel-driven load-factor pressure.
Who hurts most
CAPITAL binds through hedging depth and balance-sheet cushion. Ryanair and Wizz-style operators must choose between fares and growth every week. IAG and Lufthansa absorb billions but already cut capacity — Lufthansa trimmed 20,000 flights through October to save 40,000 tonnes of fuel. Air France-KLM posted H1 losses with €2 billion full-year fuel headwind despite 67% 2026 coverage.
Spanish exposure is tourism-heavy: Iberia, Vueling, Air Europa, and Air Nostrum live on short-haul density. They benefited from local refining and government reassurance, but ticket prices for 2027 packages will reprice as tour operators (TUI, easyJet holidays) layer fuel into 2027 programming with only ~37–39% summer coverage, per industry federation summaries.
ALA’s political ask — expanding EU ETS relief and SAF subsidies — is STATE leverage: shift environmental compliance cost off kerosene bills. Brussels has been cool to retroactive fare rules; the Commission reminded carriers they cannot surcharge already sold tickets when fuel spikes.
What to watch
- Hedge filings in Q4 2026 earnings — especially IAG and Ryanair 2027 books.
- Jet crack futures — whether $800/tonne one-year levels compress or become the new normal.
- Refinery outages in Spain and Rotterdam — physical supply is secure until it is not; distillate tightness has already jumped borders.
The next airline crisis may not ground fleets at the gate. It may ground profit forecasts at the refinery margin — exactly where 2027 hedges run out.
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Sources
ALA press briefing coverage in ABC, 20minutos, El Español (Oct. 26, 2026); La Vanguardia on Ryanair (Oct. 20, 2026); El País and Expansion on jet cracks and IAG hedges; Culled distillate and airline restructuring coverage.
