San Francisco Frontiers - Swelling jet fuel costs hit American Airlines outlook

The big US carrier, which has lagged rivals Delta Air Lines and United Airlines in earnings, reported a modestly profitable second quarter but executives slashed their full-year estimate due to the escalating US-Iran war that has lifted oil prices back to around $100 a barrel.

American's new earnings range has zero profit as a mid-point, down from an earlier range that had a median of 35 cents per share.

"Three weeks ago, we were expecting to guide to full-year pre-tax earnings approaching $1.5 billion," Chief Financial Officer Devon May said on a conference call. "The current fuel curve has dampened our expectations."

In the second quarter, American reported profits of $71 million, down 88.2 percent from the year-ago level.

Revenues rose 16.3 percent to $16.7 billion, with the carrier pointing to broad-based growth across different price points and with both international and domestic demand up "meaningfully" from a year ago.

But surging oil prices dented profits. Jet fuel costs rose $2.2 billion from the second quarter of 2025.

American said it expects $6 billion in additional jet fuel costs in 2026.

American executives said the carrier continues to see strong demand from consumers, viewing improving revenue metrics as evidence its measures to lift performance are paying off.

"It's not a linear progression," said CEO Robert Isom. "That's what I see continuing on out into 2027... When fuel prices normalize, American is going to be the best investment out there."

American has made progress in paying down debt, resulting in gradually lower interest expenses.

Executives spoke optimistically about a credit card venture with Citi and also see potential for the airline to regain market share in hubs such as Phoenix, Miami and Philadelphia where it had greater volumes before the pandemic.

American shares fell 8.2 percent in late-morning trading.

B.Turner--SFF