American Airlines has become the latest airline to cut its 2026 earnings forecast following a surge in fuel costs that added billions to expenses this year.
The company expects earnings per share to come in at a loss of 40 cents per share to a profit of US$1.10 per share. This is a steep decrease from the January forecast of $1.70 to $2.70.
It did, however, follow the trend of Wall Street analysts trimming forecasts for the industry since the U.S.-Israel attacks on Iran this year.
American Airlines made this guidance under the assumption that fuel would be $4 per gallon.
“Even in a volatile operating environment, our pretax margin improved by nearly 2 points year over year, and we still anticipate modest profitability for the year assuming the current forward fuel curve,” American Airlines CEO Robert Isom said.
Fuel is generally their biggest expense after labour.
For the second quarter, the company expects a loss of 20 cents per share to earnings of 20 cents per share.
It also expects revenue to rise 13.5% to 16.5% for the second quarter.
This comes after American Airlines delivered revenue of US$13.91 billion for the first quarter, up from $12.55 billion the same time last year. This was also above expectations of $13.79 billion.
“American delivered record revenue in the first quarter, and we’re on track for another record in the second quarter,” Isom said.
The airlines posted a net loss of US$382 million, or 58 cents per share, compared with a net loss of $473 million, or 72 cents, a year earlier. Adjusting for one-time items, the company reported a loss of 40 cents per share.
American Airlines (NASDAQ: AAL) shares finished 2.4% higher at $11.78, before slipping 0.3% after hours. The company maintains a market capitalisation of $7.78 billion.
