Rising jet fuel prices, driven by geopolitical tensions in the Middle East and Iran-related supply disruptions, represent the dominant catalyst pressuring airline balance sheets and elevating bankruptcy risk through year-end. Smaller low-cost and regional carriers with limited hedging, high leverage, and thin margins face acute liquidity strain, as evidenced by recent filings including airBaltic’s September 14 Chapter 11 petition with €350 million debtor-in-possession financing, Volotea’s late-September creditor protection move targeting completion by December, and Animawings’ insolvency proceedings. U.S. carriers reported modest Q2 2026 net income of $16 million industry-wide, but elevated fuel costs have compressed margins and prompted capacity cuts. Traders monitor upcoming earnings releases and oil price trajectories for signals on additional distressed announcements before resolution.