American Airlines lowered its 2026 earnings outlook on July 23, citing higher jet fuel costs, and its shares fell roughly 4% in premarket trading following the update, according to Reuters.

The airline revised its full-year adjusted earnings guidance to a range of ($0.65) to $0.65 per diluted share, down from a previous range of ($0.40) to $1.10. The change shifted the company's expected results closer to breakeven as fuel expenses continued to pressure margins.

American Airlines did not identify a demand collapse as the reason for the lower guidance. Instead, management pointed to fuel prices, which rose sharply in the second quarter and remained a factor in the company's third-quarter outlook.

Key figures in the update

American Airlines said its average jet fuel purchase price was $4.05 per gallon in the second quarter of 2026, according to Reuters.

For the third quarter, based on the July 21 forward curve, American expects fuel to cost roughly $3.75 per gallon. On that basis, the company said fuel expense would be about $1.7 billion higher year over year, according to an American Airlines press release distributed by GlobeNewswire.

The company also reported $4,881 million in aircraft fuel and related taxes for the second quarter, an 83.3% increase from a year earlier. Total available liquidity at quarter-end was $11.3 billion, according to the same company release.

What changed in the 2026 outlook

The central change was the full-year adjusted EPS range. American Airlines now expects adjusted earnings per diluted share of ($0.65) to $0.65, compared with the prior range of ($0.40) to $1.10, Reuters reported.

That revised range leaves the company with a wider possibility of finishing the year near breakeven rather than producing clearer profitability. The adjustment reflects the effect of higher input costs moving faster than ticket pricing.

Fuel costs affect airlines quickly because they are a major operating expense—typically among the two largest cost categories for U.S. network carriers, alongside labor—and are paid in cash. When jet fuel rises, airlines can attempt to recover part of the increase through fares, capacity adjustments, or ancillary revenue, but those offsets often take time and may not fully match the speed of fuel-cost increases.

Why jet fuel is central to airline earnings

Jet fuel does not always move in line with crude oil. Refining margins, regional supply conditions, and the jet-to-crude spread can all affect the price airlines pay for fuel. That creates basis risk for carriers, particularly when they have limited protection from fuel hedging.

American paid an average of $4.05 per gallon for jet fuel in the second quarter of 2026, Reuters reported. For the third quarter, the company's forecast based on the July 21 fuel curve was about $3.75 per gallon, with fuel expense expected to be roughly $1.7 billion higher than the prior-year period, according to the American Airlines press release.

The second-quarter fuel bill underscored the scale of the increase. Aircraft fuel and related taxes totaled $4,881 million in Q2 2026, up 83.3% year over year, according to American Airlines.

Margin pressure and liquidity

Airline profitability is typically measured through the relationship between unit revenue and unit cost. Revenue per available seat mile must exceed cost per available seat mile for margins to expand. While some non-fuel costs can be more predictable over short periods, fuel can change quickly and materially.

American's revised guidance indicates that higher jet fuel prices are narrowing the gap between revenue and costs. Even if passenger demand remains stable, higher fuel costs reduce margin per seat mile unless offset by higher yields, lower capacity, improved efficiency, or other cost controls.

The company ended the second quarter with $11.3 billion in total available liquidity, according to American Airlines. That liquidity provides operating flexibility, supports debt service, and gives management room to adjust schedules if needed. Among the three largest U.S. network carriers—American, Delta, and United—American has carried the heaviest debt load since the pandemic, which makes sustained margin pressure more consequential for its balance sheet. However, liquidity does not directly offset the margin impact of a sustained high fuel run rate.

Fare pricing and capacity trade-offs

Airlines can raise fares or adjust capacity when fuel costs rise, but price pass-through is not immediate. Leisure travel can be seasonal and price sensitive, while corporate travel may be steadier but often includes negotiated rates and contracts.

Ancillary revenue, including fees for bags, seats, and priority services, can also contribute to revenue, though such pricing changes may affect customer behavior.

Carriers also face a choice between pursuing higher load factors and protecting yields. In a period of elevated fuel costs, a full aircraft at lower fares may generate weaker economics than a slightly less full aircraft with stronger yields, depending on route, distance, competitive conditions, and fuel burn.

Operational levers available to American

Fuel prices are outside American Airlines' direct control, but the company can manage several operational variables.

Capacity discipline can include trimming less profitable routes or adjusting frequencies where demand is weaker or competition is intense. Fleet deployment can prioritize more fuel-efficient aircraft on longer routes and optimize stage lengths to reduce fuel burn.

Schedule reliability can also affect costs, because cancellations, delays, and crew repositioning can create inefficiencies. Ancillary revenue and loyalty or co-brand credit card economics can help support revenue when ticket yields fluctuate.

The company did not detail a new hedging program in the update. Large U.S. carriers in recent years have generally used limited fuel hedges compared with some international peers, which can reduce hedging complexity but leave more exposure to spot fuel price increases.

Market reaction

American Airlines shares were down roughly 4% in premarket trading after the July 23 update, Reuters reported. The move followed the lower full-year guidance and the company's warning that higher fuel costs would weigh on results.

Airline equities are sensitive to fuel cycles because carriers operate with large fixed and variable costs. When earnings guidance moves closer to breakeven, investors often focus on the impact of fuel prices, fourth-quarter trends, future-year profitability, balance sheet obligations, debt service, and lease commitments.

Other airlines can also be affected by similar macroeconomic and energy-price pressures. When one of the Big Three U.S. carriers reports a fuel-driven guidance cut, market participants often look to whether Delta and United—which typically report in the same earnings window—face comparable cost headwinds. Carriers with stronger balance sheets, greater premium revenue exposure, or more flexible networks may be viewed differently from those with heavier debt loads or less capacity flexibility.

Metrics to monitor in the third quarter

Several indicators are likely to shape how American's revised outlook develops through the back half of 2026.

The jet fuel curve and crack spreads remain central, because the relationship between jet fuel and crude oil can have a direct impact on airline costs. Forward bookings and corporate travel demand will indicate whether business itineraries are holding into the fall.

Unit revenue commentary will show whether fare strength is continuing after summer travel peaks. Operational reliability metrics, including completion factor, on-time performance, and cancellation rates, can affect efficiency when fuel costs are high.

Capacity updates may also be important if American trims shoulder-season flying or cuts underperforming routes. Cash flow and capital expenditure timing will be watched in the context of $11.3 billion in liquidity and the expected year-over-year increase in third-quarter fuel expense.

Frequently asked details

American Airlines stock fell on July 23 after the company reduced its 2026 adjusted EPS outlook and highlighted higher fuel costs. The stock traded down roughly 4% in premarket trading, according to Reuters.

The new full-year adjusted EPS guidance is ($0.65) to $0.65 per diluted share, compared with the previous range of ($0.40) to $1.10, Reuters reported.

Fuel costs rose sharply in the second quarter. American's average jet fuel price was $4.05 per gallon in Q2 2026. Based on the July 21 forward curve, the company expects about $3.75 per gallon in Q3, with fuel expense around $1.7 billion higher year over year, according to the American Airlines press release.

The company reported $4,881 million in aircraft fuel and related taxes in Q2 2026, an 83.3% increase from a year earlier. It ended the quarter with $11.3 billion in total available liquidity.

American Airlines did not describe a new fuel hedging program in the update. The company's outlook could be affected by changes in the jet fuel curve, unit revenue trends, operational reliability, and selective capacity decisions if fuel remains elevated.

This article is provided for informational purposes only and is not legal, tax, investment, financial, or other advice.