Gen Z travelers are cutting back on dining, haircuts and everyday expenses to afford trips as homeownership and other traditional milestones feel increasingly out of reach.
American Airlines issued a warning that airfares are likely to remain elevated even if there’s a decline in oil prices due to losses the carrier suffered earlier in the year amid surging fuel costs.
Devon May, CFO of American Airlines, told the Financial Times, “If fuel comes down, I think airfares probably stay largely where they’re at right now.”
“If fuel prices go up, we need to generate higher yield, we need to generate higher fares to offset that higher fuel price,” May said.
American Airlines on Thursday released its earnings for the third quarter which included deeper losses in 2026, updating its forecast to reflect anticipated losses between $1 and $1.60 a share on an adjusted basis this year. Its July forecast ranged between a loss of 65 cents and a profit of 65 cents.
MAJOR AIRLINES CUT FLIGHTS AS HIGHER JET FUEL PRICES HIT CARRIERS
American Airlines projected deeper losses in 2026 due to the surge in fuel costs. (Kevin Carter/Getty Images)
May told the FT that airlines’ ticket prices hadn’t fully recovered in real terms since the disruptions caused by the COVID-19 pandemic, saying that the price hikes “ideally should have happened back in 2024, but the industry found itself in an oversupply environment.”
“This was the first year that everything came together in a way that we were able to push yields back up to where they were seven years ago in real terms,” May told the outlet.
AMERICAN AIRLINES ADDS $1,000 TRUMP ACCOUNT MATCH FOR WORKERS’ CHILDREN
American Airlines said it expects higher fuel costs to persist into the fourth quarter. (Daniel Slim/AFP via Getty Images)
The company reported a 19% year-over-year increase in third-quarter revenue, which was above the high end of its previous guidance range and was the highest in company history when excluding the years following the pandemic.
However, fuel expenses in the third quarter surged 67.5% compared with the same period a year ago, which translated to $1.9 billion in higher fuel costs based on an average price of $3.85 a gallon.
American also forecast higher fuel prices will continue into the company’s fourth quarter, with the carrier expecting to face an average fuel price of about $4.70 a gallon — a figure that would nearly double the price in the fourth quarter of 2025 and increase fuel expenses by $2.8 billion year over year.
AMERICAN AIRLINES BETS BIG ON INTERNATIONAL FLIGHTS WITH 7 NEW ROUTES
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAL | NO DATA AVAILABLE | – | – | – |
Due to the elevated fuel prices, American said that it expects its network growth to slow in 2027 when compared with 2026 levels.
Higher fuel prices have caused airfares to surge, with the most recent data from the Bureau of Labor Statistics showing that airline fares were up 22.4% compared with a year ago in September.
CLICK HERE TO DOWNLOAD THE FOX NEWS APP
#American #Airlines #airfares #stay #high #fuel #drop