July 23 (Reuters) – American Airlines said on Thursday it could post steep losses for the year as renewed U.S.-Iran fighting pushes oil prices higher again, raising its fuel bill by billions of dollars.
The move highlights how volatile fuel markets have complicated earnings forecasts for airlines, as renewed U.S.-Iran fighting and reduced traffic through the Strait of Hormuz cloud the outlook for oil and jet fuel costs.
The strait carried about a fifth of global oil and gas shipments before the war.
American now expects an adjusted loss of 65 cents per share to an adjusted profit of 65 cents per share, compared with its previous forecast of an adjusted loss of 40 cents to a profit of $1.10 per share.
Analysts on average, however, expect a profit of 65 cents per share, according to data compiled by LSEG.
American joins smaller peer Southwest, which also narrowed its full-year profit forecast, citing elevated fuel costs.
Rival Delta, on the other hand, maintained its annual earnings target while United Airlines raised the lower end of its 2026 profit range, as they see demand holding strong despite higher fares.
American shares fell down 3.4% before the bell.
Jet fuel had surged above $5 per gallon during spring before retreating sharply in June, following a truce between Washington and Tehran. Oil prices have climbed again since the fragile agreement collapsed in early July, renewing upward pressure on airline fuel costs.
American paid an average $4.05 per gallon for fuel in the second quarter, adding up to $2.2 billion in additional fuel expenses — an 83% jump.
The billions in additional spending on fuel is not unique to American. United alone expects nearly $6 billion in additional 2026 fuel expense compared with its plan at the start of the year. Southwest’s fuel bill bloated by nearly $900 million in the second quarter.
For the third quarter, American expects to pay $3.75 per gallon, adding $1.7 billion to its previously assumed fuel bill.
Still, that drop has not proved enough for the company, which expects an adjusted loss in the range of 70 cents to 10 cents for the third quarter, compared to analysts’ expectation of a 28 cent profit.
American reported a second-quarter adjusted profit of 15 cents a share, above analysts’ estimates of 3 cents per share. Its record quarterly revenue of $16.74 billion also topped expectations of $16.71 billion.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Joyjeet Das)
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