Key facts
- American Airlines reduced its full-year profit forecast due to rising fuel costs.
- The airline's new forecast ranges from a loss to a profit, with breakeven at the midpoint.
- Jet fuel prices surged nearly 30% between July 2 and July 22 amid renewed U.S.-Iran tensions.
- American Airlines' projected fuel bill for the rest of the year increased by approximately $1.6 billion.
- Higher fares have offset only about half of the year-over-year increase in American Airlines' second-quarter fuel expense.
American Airlines has revised its full-year profit forecast downward, citing increased fuel expenses driven by escalating tensions between the U.S. and Iran. The airline now projects its full-year earnings to range from a loss to a profit, with breakeven at the midpoint, a significant shift from its earlier expectation of approaching $1.5 billion in pretax earnings. This adjustment underscores the challenges volatile fuel markets present to airline earnings, as fuel price movements can outpace revenue gains from strong travel demand. Jet fuel spot prices surged nearly 30% between July 2 and July 22, impacting the industry's outlook. American Airlines reported paying an average of $4.05 per gallon for fuel in the second quarter and anticipates paying $3.75 per gallon in the third quarter. The airline's thinner margins compared to competitors like Delta and United leave it with less room to absorb higher fuel costs, potentially slowing debt reduction and constraining investment if fuel prices remain elevated.