Virgin Australia Holdings Ltd (ASX: VGN) shares closed 7% higher on Wednesday afternoon, at $2.52 a piece.
The uptick is great news for investors after the airline's shares suffered a very rocky start to the year.
But there is a long way to go before the shares can claw back losses shed over the past six months. Virgin Australia shares are now down 28% for the year-to-date. They're also down over 32% from an all-time high in October last year.
The airline hasn't been trading for 12 consecutive months yet, but it launched its initial public offering (IPO) at $2.90 per share in June last year.
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Why have Virgin Australia shares been tumbling?
It looks like the initial decline late last year was investors selling up and taking gains off the table after the IPO announcement caused a share price rally.
Then, over the past couple of months, Virgin Australia shares have faced some strong headwinds.
Ongoing conflict in the Middle East has severely restricted the supply of jet fuel (which is derived from refined crude oil). The airline has previously raised its domestic airfares in response to rising jet fuel costs in effort to maintain or even boost revenue. But investors were still concerned about how the higher jet fuel prices will affect the airlines operating costs and profits.
There have also been reports that Virgin Australia's partnership with Qatar Airways has come under pressure while the war continues to affect aviation routes.
An overall shift in sentiment has caused Virgin Australia shares to tumble as investors sell up their holdings.
And what caused the latest share price spike?
But it looks like the stock took a sharp u-turn on Wednesday. Ahead of the ASX open the company confirmed that its FY26 financial guidance remains unchanged. Despite fuel prices almost doubling, the airline still expects its underlying EBIT to improve in the second half of FY26.
Virgin Australia's fuel costs are expected to be around $30 million to $40 million above its earlier forecasts. But because it has strong hedging, the group is protected against most price rises.
The airline confirmed that 92% of its Brent crude and 71% of refining margin exposure is hedged for the remainder of FY26.
The company's outlook for FY26 remains solid. And it looks like investors breathed a huge sigh of relief.
Can Virgin Australia's shares keep climbing from here?
According to analyst estimates, Virgin Australia shares have a long way to run before they reach their peak.
TradingView data shows that seven out of eight analysts have a buy or strong buy rating on the airline's shares.
The average target price of $3.79 implies a 50% upside at the time of writing, whereas the maximum $4.10 target price suggests the stock could surge another 63% over the next 12 months.
