American Airlines has warned that airfares will not return to pre-Iran war levels even if oil prices fall, as the carrier expects a full-year loss due to elevated fuel costs. Finance chief Devon May stated that fares are unlikely to decrease, noting that ticket prices have not fully recovered in real terms since the pandemic. The airline reported a 19% rise in third-quarter revenues, driven by a 23% increase in premium travel sales and a 28% boost in corporate revenue.
However, high jet fuel prices added $1.9 billion in costs, leading to a profit forecast cut to a loss of $1 to $1.60 per share. Rival Delta Air Lines also slashed its profit outlook despite a 16% revenue increase, while United Airlines faced a $1.8 billion fuel hit. Executives point to resilient demand, with Delta raising prices by a fifth without impacting sales.
US carriers are more exposed to fuel price fluctuations than hedged European and Asian rivals. With fewer hedges in place, airlines like Ryanair and Latam anticipate further price increases next year. Aviation economist Dan Akins attributes the sustained high fares to limited competition and financial pressures on budget airlines.
Source: Financial Times Companies · Summarized by HeadlinesBriefing