Oct 22 (Reuters) – American Airlines forecast a 2026 loss on Thursday, abandoning its previous forecast range that allowed for a profit, as high jet fuel prices outpace fare increases and squeeze margins.
Shares of the airline fell 3.5% in premarket trading.
Since the start of the Iran war, airlines have raised fares sharply to protect margins but even that has failed to keep pace with the surge in jet fuel prices. The volatile environment has also made forecasting future fuel costs difficult.
With no end in sight to the war, US carriers must also determine how much of the fuel cost surge they can pass on through higher fares without weakening travel demand that has held up so far.
Major rivals such as Delta Air and United Airlines have warned that the industry may need to cut capacity further to preserve pricing power and keep costs in check.
Delta CEO Ed Bastian earlier this month warned that airlines may need to further curb flight growth next year to sustain higher fares and protect profitability.
US air fares rose an average of nearly 23% year-on-year in the seven months through September, according to Labor Department data.
American Airlines now expects an adjusted loss of $1.00 to $1.60 per share, compared with its previous forecast ranging from a 65 cent profit to a 65 cent loss per share.
The carrier reported a net loss of $269 million, or 41 cents per share, for the quarter through September, compared with a loss of $114 million, or 17 cents per share, reported last year.
Its revenue for the quarter rose 19.3% to $16.3 billion, supported by fare hikes.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Devika Syamnath)
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