Key facts
- American Airlines CEO Robert Isom warned that high fuel prices may lead to capacity adjustments.
- The airline's fuel costs surged by over $2.2 billion in the second quarter, an 83% increase year-over-year.
- American Airlines anticipates nearly $6 billion in additional fuel expenses for 2026 compared to the previous year.
- The carrier expects to pay approximately $3.75 per gallon for jet fuel in the third quarter.
- American Airlines has reduced its third-quarter capacity growth forecast to 3%-5% from a previously planned higher figure.
- Total revenue increased by 16.3% in the second quarter, driven by higher demand and premium seat sales.
American Airlines CEO Robert Isom stated on Wednesday that persistently high fuel prices could compel the carrier to revise its future capacity plans. Despite robust demand and increased fares helping to offset a significant portion of the rise in fuel expenses, the airline is facing substantial cost increases.
Speaking at a Morgan Stanley conference, Isom expressed optimism about American's third-quarter revenue growth forecast, projecting a 16% to 19% increase, and anticipates that most of these recent revenue gains will be sustained. However, the airline's financial outlook has been significantly impacted by soaring fuel costs.
In the second quarter, American's fuel bill surged by over $2.2 billion, an 83% increase from the previous year. Chief Financial Officer Devon May noted that the situation continues to worsen, with fuel expense forecasts for the third quarter alone increasing by more than $700 million since the start of July. Based on current market pricing, American expects to pay approximately $3.75 per gallon for jet fuel in the third quarter, adding an estimated $1.7 billion in fuel costs for that quarter compared to last year. For the full year 2026, the airline anticipates nearly $6 billion in extra fuel costs compared to 2025.
To manage these rising costs, American Airlines has already trimmed its third-quarter growth plans, now expecting capacity to grow only 3% to 5% compared to last year, a reduction of about two percentage points from its original projections. Isom highlighted the extreme volatility in fuel prices as the reason for these rapid adjustments.
Despite the fuel cost challenges, American's revenue has shown strong growth. Total revenue rose 16.3% in the second quarter year-over-year, supported by increased demand across all regions and higher sales of premium seats, which grew 19%. Corporate travel spending also saw a significant jump of 26% from last year, marking five consecutive quarters of double-digit growth in that segment. This revenue strength has helped American cover nearly half of its increased fuel costs in the second quarter.