American Airlines posts 28-cent loss on $1.9 bn fuel increase

American Airlines Group reported a third-quarter adjusted loss of 28 cents a diluted share on Oct. 22, even as revenue rose 19.3% to $16.3 billion, Markets Daily reported from the earnings call.

In the Oct. 22 earnings-call report, American said revenue topped the high end of its guidance range, but it forecast a fourth-quarter adjusted loss of 50 cents to $1.10 a diluted share as fuel remains a cost pressure.

Chief Executive Officer Robert Isom said fuel expense increased by $1.9 billion from a year earlier in the third quarter. The carrier paid an average of $3.85 a gallon, up $1.48 a gallon from the same period last year, according to the report.

“Our job now is to convert all this progress into better margins, free cash flow, and an even stronger balance sheet,” Isom said. He said American would have been “solidly profitable” without the fuel-price spike, while also saying the company was not satisfied with posting a loss.

Chief Commercial Officer Nat Pieper said total unit revenue, a measure of revenue per unit of airline capacity, rose 14.5% from a year earlier in the third quarter. Domestic passenger unit revenue increased 13.6%, while international passenger unit revenue rose 16.4%, according to the report.

The company’s premium business remained a bright spot. Isom said premium seats account for about 30% of seats but roughly half of American’s ticket revenue. American is adding premium seats through aircraft deliveries and retrofit programs covering more than 200 Boeing 777, Airbus A320 and Airbus A319 aircraft over the next three years.

American’s corporate and loyalty channels also expanded. Pieper said managed corporate revenue rose 28% year over year, travel-management-company channel sales increased 27%, and the AAdvantage Business program for small and medium-size companies grew 46%.

Chief Financial Officer Devon May said American expects fourth-quarter fuel to average about $4.70 a gallon, based on the forward curve as of Oct. 19. At that price, the company expects fourth-quarter fuel expense to rise about $2.8 billion from a year earlier.

American forecast fourth-quarter revenue growth of 19.5% to 22.5% from a year earlier. It also projected a full-year adjusted loss of $1.00 to $1.60 a diluted share and said full-year fuel expense would be more than $7 billion above 2025 levels.

Costs excluding fuel and special items grew about 3% per available seat mile in the third quarter, better than the midpoint of prior guidance, May said. The company expects that metric, known as CASM ex, to increase 2.5% to 3.5% in the fourth quarter.

Management said capacity growth will slow considerably in 2027 as American responds to higher fuel costs and better matches seats to demand. Isom said 2026 growth was aimed at rebuilding the network after the carrier had undergrown competitors since the pandemic.

American expects 47 new aircraft deliveries in 2026 and capital expenditures of $4 billion to $4.5 billion. The company said it is close to finishing a wide-body order campaign to replace its Boeing 777-200 fleet over the next decade, but the report gave no manufacturer or order-structure details.

American ended the third quarter with $11.8 billion of total available liquidity and more than $26 billion of unencumbered assets in first-lien capacity. May said total debt has declined to roughly $36 billion from $54 billion during the pandemic, and the company expects year-end net debt of about $30.5 billion.

For the fourth quarter, American’s checkable targets are revenue growth of 19.5% to 22.5% year over year, an adjusted loss of 50 cents to $1.10 a diluted share and average fuel of about $4.70 a gallon.

By year-end, the company expects full-year fuel expense to be more than $7 billion above 2025 levels, net debt of about $30.5 billion and nearly $1 billion in annual run-rate savings.

For 2026, American expects 47 aircraft deliveries and capital expenditures of $4 billion to $4.5 billion. For 2027, management said capacity growth will slow considerably and the carrier plans seven new long-haul international routes.