Elevated jet fuel prices stemming from the February 2026 Iran conflict have become the dominant driver of airline financial stress, pushing spot prices above $4.50 per gallon and eroding margins for ultra-low-cost carriers already carrying high debt loads and thin liquidity. Spirit Airlines, which filed for Chapter 11 protection twice since late 2024, exhausted restructuring options and ceased operations in early May after a proposed $500 million government financing package collapsed, highlighting the vulnerability of carriers without premium revenue streams or hedging coverage. Analyst models now assign JetBlue greater than 75 percent bankruptcy risk by 2027 and Frontier 45-50 percent, reflecting sustained unprofitability, elevated lease obligations, and limited ability to pass through costs amid softening leisure demand. Larger network carriers such as American and United have revised 2026 earnings forecasts downward by billions in fuel expense but retain stronger balance sheets and diversified revenue that reduce near-term resolution risk. Traders are monitoring upcoming quarterly results, any renewed fuel-price volatility, and potential regulatory or creditor interventions as key swing factors before year-end.