American Airlines has lowered its financial outlook for 2026 on Thursday, now projecting the possibility of losses rather than profits as escalating jet fuel expenses continue to pressure the company’s bottom line.
The Dallas-based carrier anticipates its fuel expenses will climb by more than $4 billion during 2024, with jet fuel prices hovering around $4 per gallon throughout the second quarter.
Aviation fuel costs, which generally represent approximately 25% of an airline’s operational budget, have essentially doubled since Middle Eastern conflicts began, creating a squeeze between rising expenses and previously sold tickets at fixed prices that cannot be modified.
The price surge occurred after military actions involving the U.S. and Israel against Iran disrupted shipping lanes through the Strait of Hormuz, a vital passage for worldwide oil distribution, creating the aviation sector’s most significant challenge since the coronavirus pandemic.
While passenger demand across the United States has remained stable, the expense increases have damaged profit margins. Carriers have responded by raising ticket prices, reducing flight capacity, and increasing charges for additional services such as baggage fees to offset some financial impact.
The company projects earnings between a 20-cent per-share loss on the low end and a 20-cent profit on the high end for the second quarter, while analysts had predicted a 9-cent loss based on LSEG data.
Company stock rose approximately 1% during pre-market trading sessions.
Carriers operating extensive international routes and offering premium service options are anticipated to navigate these challenges more successfully, as wealthy travelers demonstrate greater ability to absorb fare increases.
American Airlines reported Thursday that revenue from its premium seating sections continued to exceed performance in standard economy class.
For the full year, the airline now expects results ranging from a 40-cent per-share loss to a $1.10 per-share profit, a significant reduction from its previous forecast of $1.70 to $2.70 profit per share.
The carrier posted an adjusted quarterly loss of 40 cents per share for the period ending March 31, which was better than the 47-cent loss analysts had anticipated.
Overall operating revenue reached $13.91 billion, surpassing Wall Street projections of $13.79 billion.
