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This week

The week belonged to Riyadh, for the worst of reasons. Three Houthi attacks on King Khalid International Airport in the space of a week culminated on Saturday in a ballistic missile strike that killed at least 12 people and wounded about 309, according to Saudi Arabia’s General Authority of Civil Aviation. It was the deadliest attack on the kingdom in more than a decade, and it came with an explicit Houthi warning that civil aircraft in Saudi airspace would be treated as targets.

Away from the Gulf, the capital markets told a more familiar story. Avolon, the world’s third largest lessor, signed for 250 aircraft across Airbus and Boeing, its largest order with either manufacturer. Delta Air Lines, meanwhile, put a number on this year’s fuel spike, cutting its full-year earnings range by roughly a fifth. Airbus posted a respectable September but still faces a record fourth quarter, and Southwest is reported to be weighing its first widebody.

Airlines

Delta cuts 2026 guidance as fuel bill climbs by $6bn

Delta Air Lines reduced its 2026 adjusted earnings per share guidance to $5.10 to $5.60 on 9 October, down from the $6.50 to $7.50 range it gave in July. The new $5.35 midpoint sits just below the LSEG consensus of $5.46. The carrier now expects its fuel bill to rise by $6bn this year, $2bn more than previously assumed. Third quarter adjusted EPS of $1.72 narrowly missed the $1.76 estimate, the adjusted operating margin fell to 9.4% from 11.1%, and fuel expense climbed 62% year on year to $4.1bn at an average of $3.61 a gallon. Shares fell 3.5% in premarket trading.

The CFO’s explanation was blunt: “All of it’s fuel.” Demand is not the problem. Delta guided to fourth quarter revenue growth of about 20%, with nearly 60% of the quarter already booked, and US fares rose about 25% year on year in the five months to August according to the Bureau of Labor Statistics. Yet fourth quarter fuel is expected to reach $4.25 a gallon even after a 40 cent benefit from the Monroe refinery, which should contribute about $700m this year.

For investors, the read across matters more than Delta’s own number. Delta has the only refinery hedge among the large US carriers, so peers without it face a heavier hit to fourth quarter margins. Pricing power is plainly intact, but fares that are already up a quarter leave limited room to pass on another leg higher in jet fuel without testing leisure demand.

LOT returns to Bangkok after 26 years

LOT Polish Airlines restarted nonstop Warsaw to Bangkok service on 7 October, the carrier’s first scheduled flights on the route in roughly 26 years. The route opens at three weekly frequencies before stepping up to five a week from 26 October, operated by Boeing 787 aircraft. Block times are about 10 hours 20 minutes outbound and 11 hours 55 minutes on the return.

The launch adds a direct Central European option to a market long served via Gulf and Turkish hubs. With Riyadh’s airspace now contested and European regulators widening their advisories, point to point long-haul flying that routes around the region carries a value it did not have a month ago.

Southwest reported to favour the 787 for long-haul push

Southwest Airlines is weighing an order for Boeing 787s to support its first long-haul international flying, Reuters reported on 8 October, citing people familiar with the airline’s fleet planning. No decision has been taken, and the number of aircraft has not been disclosed. With 787 production reportedly sold out through the end of the decade, Southwest is understood to be studying earlier access through lessors or the secondary market. Chief executive Bob Jordan has spoken of serving up to a dozen long-haul destinations rather than replicating the networks of the three legacy carriers.

Getting aircraft is the easier part. The transatlantic market is dominated by the joint ventures of American, Delta and United, and a carrier operating outside those alliances will struggle for feed at the far end. Southwest’s recent move to assigned seating, premium legroom and lounges suggests the long-haul ambition is about keeping Rapid Rewards members inside the programme rather than winning share on the Atlantic.

Mergers Acquisitions & Finance

Avolon orders 250 aircraft from Airbus and Boeing

Avolon placed firm orders on 9 October for 250 aircraft: 140 Boeing 737 MAX, 75 Airbus A320neo family and 35 A330neo, with options on up to 100 further Airbus aircraft. The commitment lifts the Dublin-based lessor’s order book to 749 aircraft against an owned fleet of 561. Both orders require approval from majority shareholder Bohai Leasing, which Avolon expects before the end of October. Chief executive Andy Cronin said the company continues “to see strong demand for new-technology aircraft.” Avolon also sold 29 aircraft in the third quarter, with 112 more agreed for sale at the end of September.

Scale is the obvious headline, but the mix deserves attention. Splitting the narrowbody order across both manufacturers hedges delivery risk on either production line, and 35 A330neos is a meaningful vote of confidence in a type that has struggled for deliveries this year. Lessors now own about half the global fleet, and with OEM backlogs stretching into the 2030s, a position this size is as much a bet on future lease rates as on aircraft.

Pairing the order with continued sales of older aircraft shows how lessors are using today’s strong secondary market. Selling midlife assets at firm prices funds new-technology deliveries that will command premium rents. The open question is what happens to those rents if delivery rates finally recover and the scarcity premium narrows.

Airport Developments

Houthi strikes kill 12 at Riyadh’s King Khalid International Airport

A Houthi strike on King Khalid International Airport on Saturday 10 October killed at least 12 people and wounded about 309, some critically, according to the General Authority of Civil Aviation. Victims included four Saudi nationals, two Bangladeshis and one person each from the United States, Jordan, Palestine, Syria, Sudan and Egypt. It followed attacks on Thursday 8 October that killed three Saudi nationals, including a pilot, and damaged a Saudia aircraft. Operations were suspended while the authority assessed the damage, and a projectile also fell near King Fahd International Airport in Dammam.

Disruption was already severe before Saturday. Flightradar24 data showed 335 Riyadh cancellations on 8 October and 141 more on 9 October, with 289 delays. Lufthansa Group suspended Riyadh flights until 16 October, Air India and Akasa Air until 10 October, and Pakistan International Airlines also halted service. The Houthis have declared Saudi airspace a zone of military operations, warning that aircraft anywhere outside Mecca and Medina could be targeted, and EASA has widened its advisory area, citing the risk of misidentification of civilian aircraft. The US, UK, Ireland and Canada have all told citizens to avoid the airport.

The commercial consequences reach well beyond one airport. Riyadh sits at the centre of Saudi Arabia’s plans to build a global hub around Riyadh Air and King Salman International Airport, and those plans rest on the assumption that the kingdom is a safe place to connect. Insurers will reprice war risk cover for Saudi operations, foreign carriers will be slow to return even after airspace advisories ease, and overflight traffic that had shifted towards Saudi corridors may move again.

US President Donald Trump said Washington was evaluating whether to join the conflict and would “move very quickly”. For airlines and lessors with Saudi exposure, the near term planning case has to assume intermittent closures through at least the rest of the year.

Sunshine Coast Airport opens expanded arrivals hall

Sunshine Coast Airport in Queensland opened a new arrivals precinct and baggage claim hall on 7 October as part of a A$170m terminal redevelopment. The hall is nearly three times the size of its predecessor and includes a 92m carousel. When complete in 2027, the project will almost double the terminal footprint to 11,750 square metres and add two departure gates, taking the total to seven. The airport handled about 1.8 million passengers in 2025 to 2026 and expects 2.4 million by 2030.

Industry Innovations & Services

Airbus delivers 72 aircraft in September, faces record fourth quarter

Airbus delivered 72 commercial aircraft to 37 customers in September, up from 57 in August, taking deliveries for the first nine months to 547 against 507 a year earlier. To reach its target of about 870, the manufacturer must hand over 323 aircraft in the fourth quarter, roughly 108 a month. September orders fell to 17, the lowest monthly total this year. The A330neo remains a weak spot, with deliveries running far below the targeted four a month, and Airbus has asked operators to carry out additional horizontal tailplane checks on a set of aircraft built between 2021 and July 2026 after a tool was found inside an airframe’s structure.

Airbus has hit year end targets through heavy December pushes before, but 108 a month would be a step change from anything achieved so far in 2026. Any shortfall lands directly on airlines and lessors already short of capacity, which is one reason orders like Avolon’s continue to be placed despite the backlog.

Key Watch Items

Saudi airspace sits at the top of the list. Watch whether the US joins military operations against the Houthis, how long Lufthansa Group and other carriers extend their suspensions, and whether EASA advisories widen further across the Gulf.

Bohai Leasing’s approval of the Avolon order is expected before the end of October. United and American report third quarter results in the coming weeks, and their fuel commentary will show how much of Delta’s guidance cut is industry wide. Airbus’s October deliveries will indicate whether a 108 a month run rate is credible.

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