Virgin Australia, Qantas shares jump 8% higher this week. Are the ASX airline stocks a buy, sell or hold?

Qantas Airways Ltd (ASX: QAN) and Virgin Australia Holdings Ltd (ASX: VGN) shares have jumped higher over the past week as investors redirect their attention to ASX airline stocks.

At the time of writing, on Tuesday lunchtime trade, Qantas shares have slumped 0.11% to $9.17. Over the past week, the flying kangaroo’s shares have climbed 7.8% higher, recouping losses made in March. Qantas shares are now down 12% year to date.

Meanwhile, Virgin Australia shares have tumbled 2.7% in Tuesday lunchtime trade, to $2.53 a piece. Despite today’s drop, the ASX airline shares are still 7.7% higher than a week ago. For the year to date, Virgin Australia shares are down 27%.

Both ASX airline stocks crashed in March: Here’s why

The two aviation companies have faced significant headwinds so far in 2026 as conflict in the Middle East and rising fuel prices put airlines under pressure.

The largest operating cost for airlines is its jet fuel, which is refined from crude oil. Given Australia imports more than 90% of its refined fuel, its local prices track global oil prices and currency movements. 

That means that when oil prices rise due to tight supply or geopolitical tensions, jet fuel prices also rise. This then means that airlines, such as Qantas and Virgin Australia, face higher operating costs, which can pressure profits and potentially weigh on their share prices.

Both airlines previously raised domestic airfares and reduced routes in response to rising jet fuel costs in order to maintain, or even boost, revenue. But investors were still concerned about the airline’s operating costs and profits, and many have turned their backs on the travel companies over the past few months.

Why have Qantas and Virgin Australia shares turned around over the past week?

It looks like investors are slowly rotating back into airlines and travel companies after fears around Middle East fuel disruptions have started to ease. 

According to Trading Economics data, WTI crude oil prices started tumbling late last week and now sit around US$91 per barrel. Oil prices plunged by more than 6% on Monday alone amid rising optimism about a potential US-Iran agreement to end the conflict and reopen the Strait of Hormuz. 

Easing fuel costs and supply concerns are great news for airline companies.

Meanwhile, although international travel demand has softened thanks to geopolitical tensions and cost-of-living pressures, domestic travel has continued to remain resilient. 

Why are they tumbling again today?

There isn’t any price-sensitive news out of Qantas or Virgin Australia today to explain the latest price dip, and the oil price has remained stable after the latest dip.

It’s likely that today’s downward pressure is sentiment-driven, or that investors are taking gains off the table after the recent price spike.

What’s next for Virgin Australia’s shares?

The outlook for Virgin Australia shares is incredibly bullish. Analyst consensus is that the stock is a buy and they tip an upside of up to 64% to $4.15 over the next 12 months. 

What’s next for Qantas shares?

It looks like Qantas shares could storm higher too, although at a slightly lower rate. The majority of analysts (13 out of 14) have a buy or strong buy rating on the airline stock. They also expect the shares to fly another 40% to $12.80 over the next 12 months, at the time of writing.

The post Virgin Australia, Qantas shares jump 8% higher this week. Are the ASX airline stocks a buy, sell or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.