Elevated jet fuel prices, driven by Middle East conflicts and supply disruptions, represent the dominant factor pressuring U.S. airline balance sheets and raising bankruptcy probabilities through year-end. The industry’s 2026 net profit forecast was halved to roughly $23 billion as fuel costs surged, exposing carriers with high leverage and thin operating margins. JetBlue faces the greatest near-term risk, with founder comments and analyst models projecting over $1 billion in 2026 losses that could push debt toward unsustainable levels and interest expense above $800 million. Frontier and Allegiant also carry elevated distress signals tied to similar cost structures. Budget carriers remain most vulnerable to consolidation or filings, while major network airlines show lower but non-zero exposure. Traders will monitor upcoming quarterly earnings, fuel hedging disclosures, and any further geopolitical shocks for shifts in implied probabilities.