LatAm airline shares jump as US-Iran pact knocks oil lower, easing fuel-cost pressure

LatAm airline shares jumped on Monday after oil fell on news of a U.S.-Iran peace agreement, easing fuel-cost pressure. LATAM Airlines rose about 4%, Copa Holdings gained roughly 2.5%, Aeromexico up 3%, Volaris 5%, and Azul almost 6%. JPMorgan said the drop in fuel costs could support near-term profitability, though it expects oil prices to stay relatively elevated over the medium term. The bank named LATAM and Copa as its top picks, citing attractive valuations, stronger balance sheets and more consistent cash flow, while Aeromexico was favored for earnings momentum and pricing power; Azul and Volaris faced more cautious assessments.

JPMorgan estimated that a 10% move in jet fuel translates into about an 8% change in EBITDAR on average, highlighting fuel’s sensitivity for the region’s carriers. In the near term, lower oil supports margins, but the bank cautions that prices could remain high as the macro picture evolves. The note reinforces LATAM and Copa as preferred exposures given valuation and balance-sheet strength, while assigning more risk to Azul and Volaris due to company-specific factors and potential near-term selling pressure.