SerpApi.Org
American Airlines said it is on course for an adjusted loss in the current quarter after the latest surge in jet fuel prices.
The carrier said Thursday that revenue is projected to rise 16% to 19% in the third quarter but that it is on track to post an adjusted loss of 10 cents to 70 cents a share. Analysts polled by FactSet had been forecasting an adjusted profit of 26 cents a share.
Given the recent jump in fuel costs from the ongoing war in Iran, American said its bottom line for the full year would be somewhere between an adjusted profit of 65 cents a share and an adjusted loss of 65 cents a share. That’s down from a previous target of between an adjusted loss of 40 cents a share and adjusted earnings of $1.10 a share.
American’s stock slid 3.6% to $14.26 in premarket trading.
Airlines have been getting hammered this year by soaring jet fuel prices, which hit record highs of more than $4.80 a gallon in April, according to the Argus US Jet Fuel Index. After recovering to about $2.81 a gallon in early July, prices shot back up after the U.S.’s ceasefire with Iran collapsed earlier this month. As of Wednesday, the spot price of jet fuel was $3.65 a gallon.
Carriers have raised prices to offset their rising costs. American said revenue in the second quarter climbed 16% to $16.74 billion, ahead of analyst estimates. Demand was strong and revenue rose across its premium, main cabin, domestic and international seats.
Higher fares helped American mitigate nearly half of the impact of an 83% increase in fuel costs, the company said.
The company logged a quarterly profit of $71 million, or 11 cents a share, compared with $599 million, or 91 cents a share, in the same quarter a year earlier.
Stripping out one-time items, adjusted earnings were 15 cents a share. Analysts had been looking for just 3 cents a share, according to FactSet.
Write to Dean Seal at [email protected]