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An American Airlines plane sits at the gate at Los Angeles International Airport.
new york
CNN
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american airlines said that rising costs, including fuel, will put pressure on future profits.
The Forthworth-based airline said: Regulatory filing Adjusted earnings per share for the third quarter are expected to be between 20 cents and 30 cents, significantly lower than the 95 cents per share the airline had previously expected.
American Airlines said fuel prices have increased “significantly” since July, when it released its first third-quarter outlook. Airlines pay about $3 per gallon for jet fuel. Oil prices rose 9.1% last month, according to the Labor Department’s Consumer Price Index report. It came out on Wednesday.
Another reason for the decline in profits is the new pilot contract.Earlier this summer, the airline announced that its pilots 9 billion dollars We offer tiered compensation and benefits.
Also on Wednesday, low-cost airline Spirit lowered its third-quarter revenue by 5% from its previous forecast. The adjusted outlook is due to higher fuel prices in the weeks leading up to the Thanksgiving weekend and “increased promotional activity with deep discounts on travel bookings.”
American stocks (AAL) and spirit (keep) fell about 3% in premarket trading.
The world’s airlines are on track to gain nearly $10 billion this year as business recovers from the pandemic, according to a recent forecast from the International Air Transport Association. In June, the group said it had more than doubled its 2023 profit forecast for the global airline industry, despite an impending economic downturn.
The airline’s net profit in 2023 is expected to be $9.8 billion, up from its December forecast of $4.7 billion.
United Airlines CEO Scott Kirby previously told CNN The airline said it expects profitability to return to 2019 levels this year. However, the airline had more cash on its balance sheet to withstand a possible economic downturn in the near term.
“We have dramatically improved our relative and absolute margins and are beginning to pay down our debt. This provides us with the momentum to weather the short-term downturn,” Kirby said.