American Airlines cut its 2026 profit forecast to a breakeven range on July 23, warning that surging jet fuel costs will leave the carrier with minimal earnings this year despite record quarterly revenue and strong travel demand. The airline now expects full-year adjusted earnings between a loss of 65 cents and a profit of 65 cents per share, down from its previous guidance of a loss of 40 cents to a profit of $1.10, as fuel expenses consume an outsized share of revenue gains.
The revised outlook marks a dramatic reversal. American Airlines had been positioned to raise its 2026 earnings forecast earlier in July, but in just 13 days, its projected fuel bill for the rest of the year surged by nearly $1.6 billion. Chief Financial Officer Devon May told Reuters that if the airline had issued guidance on July 10 when Delta reported, it would have raised the outlook instead of cutting it.
American’s challenge reflects a fundamental vulnerability in the airline business: fuel markets move sharply in days, while fare increases take weeks or months to flow through bookings. In the second quarter, American offset nearly half of a $2.2 billion year-over-year increase in fuel expense through higher ticket prices—a recovery rate that falls short of what competitors like Delta achieved. May said that each one-cent increase in American’s average fuel price adds roughly $46 million to annual expenses.
The fuel shock has tested all major U.S. carriers, but with uneven results. Delta Air Lines maintained its annual earnings target in July, while United Airlines raised the lower end of its forecast despite a $575 million surge in third-quarter fuel costs since early July. Southwest Airlines and Alaska Air, however, also cut their outlooks. The difference partly reflects when each airline issued guidance—Delta on July 10, American on July 23—as jet fuel spot prices rose 78 cents per gallon between those dates.
American’s thinner profit margins leave it less cushion to absorb fuel-cost shocks compared to Delta and United. The airline reported record quarterly revenue of $16.7 billion in Q2 2026, up 16.3% year-over-year, and forecast strong unit revenue growth in the second half. Yet these gains are being overwhelmed by fuel expenses. For the third quarter, American expects revenue to rise 16% to 19% but projects an adjusted loss of 70 cents to 10 cents per share, well below analyst expectations of a 28-cent profit.
The broader airline industry is grappling with the same headwind. The International Air Transport Association cut its 2026 industry profit forecast to $23 billion in June, down from a previous estimate of $41 billion, citing oil prices surging amid Middle East tensions. Jet fuel is expected to average $152 per barrel in 2026, up 69% year-over-year from $90 per barrel in 2025, adding roughly $100 billion to the industry’s collective fuel bill.
American’s CEO Robert Isom has been working to rebuild corporate travel, add premium seats, and grow loyalty program revenue. But the fuel surge is testing that turnaround strategy. May said American aims to pass on as much of any fuel-cost increase as possible through fares, but acknowledged that the share it can recover remains unpredictable. If fuel prices remain elevated, weaker cash generation could slow debt reduction, constrain investment, and increase pressure to trim less-profitable flying.
Sources
- Reuters — American Airlines’ July 23 guidance cut, fuel shock details, and CFO commentary on earnings forecast reversal
- American Airlines Newsroom — Q2 2026 earnings release with record revenue figures and full-year guidance
- Reuters — Analysis of fuel swings affecting airline earnings forecasts across Delta, United, Southwest, and Alaska Air
- IATA — Industry profit forecast cuts and jet fuel price projections for 2026
