** Bank of America expects airlines' earnings to drop by the end of the year as the war-driven spike in fuel prices forces carriers to raise fares

** Broker cuts its FY 2026 estimates on airlines EBIT by 9%, despite forecasting higher fares supported by strong demand and capacity cuts

** "We expect limited impact from the fuel price surge on 1Q earnings," BofA adds, citing European airlines' hedging and the physical settlement lag of fuel, still based on pre-war levels in March

** While Ryanair RYA.I stays most protected, Wizz WIZZ.L - excluded from the FY 2026 estimate cut - is expected to drop 33% by the end of the year, as it is the most sensitive to fuel prices swings

** It favours IAG ICAG.L as it prefers airlines with strong returns, margins and balance sheets in volatile times

** BofA says European fares need to rise about 5% to offset fuel price hike, with a bigger increase in 2H as hedges roll off