Elevated jet fuel prices, driven by Middle East conflict and resulting airspace disruptions, represent the primary catalyst pressuring airline balance sheets and elevating bankruptcy risks through year-end 2026. The International Air Transport Association halved its 2026 global profit forecast to roughly $23 billion amid these costs and thin operating margins, with budget carriers facing the greatest exposure due to limited pricing power and high fixed expenses. Spirit Airlines completed its wind-down in May after repeated Chapter 11 filings, while smaller operators including Air Mountain and Magnicharters have already entered proceedings. JetBlue's founder highlighted potential $1.3 billion losses at current fuel levels that could push leverage toward unsustainable levels, though management has rejected near-term restructuring. Traders monitoring FOMC-driven Treasury yields, crude benchmarks, and seasonal demand should watch for additional low-cost carrier filings ahead of any consolidation wave.