American Airlines (AAL.US)'s Q3 revenue hit a record of $16.3 billion, but a sharp increase in fuel costs of 67% was the biggest drag, and a net loss is expected to be recorded for the whole year

The Zhitong Finance App learned that American Airlines (AAL.US) announced financial results for the third quarter of fiscal year 2026 (ending September 30) on October 22. According to financial reports, total revenue for the quarter was US$16.34 billion, up 19.3% year on year, setting the highest record in the company's history other than the post-pandemic year and exceeding the upper limit of the previous guidance range.

Despite this, the airline is expected to lose money in 2026, abandoning the previous guidance range where profit and loss were possible. The reason is that the increase in aviation fuel prices, which remains high, exceeds the increase in ticket prices, and continues to squeeze the company's profit margins.

American Airlines spent 4.635 billion US dollars on fuel during the quarter, up 67.5% year on year, and spent 1.9 billion US dollars more than the same period last year; the average fuel price jumped from 2.37 US dollars/gallon to 3.85 US dollars/gallon in the same period last year, and the fuel cost per usable seat mile rose from 3.58 cents to 5.74 cents. Dragged down by this, GAAP's net loss was US$269 million (year-on-year increase), with an adjusted loss of $0.28 per share. It was $0.17 in the same period last year, but it was better than the market's unanimous expectation of $0.36.

After the announcement of the earnings report, as of press release, the stock was down more than 4% in the premarket.

Since the outbreak of the conflict in Iran, airlines have drastically raised ticket prices to maintain profit margins, but even so, they are still unable to keep up with the sharp rise in aviation fuel prices. The volatile market environment also made subsequent fuel cost predictions more difficult. Currently, the conflict has shown no signs of abating. US airline companies still need to weigh: how much of the rising fuel costs can be passed on through price increases without impacting the current strong travel demand.

Major competitors such as Delta Air Lines (DAL.US) and United Airlines (UAL.US) have indicated that the aviation industry may need to further reduce capacity to maintain pricing rights and control costs.

Delta Air Lines CEO Ed Bastian warned earlier this month that the airline may need to continue to slow the pace of flight expansion next year in order to maintain high ticket prices and guarantee profits. According to data from the US Department of Labor, in the seven months up to September, American Airlines ticket prices increased by an average of nearly 23% year over year.

In terms of business segmentation, American Airlines' premium class revenue surged 22.9% year over year; corporate travel revenue increased 27.6% year over year, achieving double digit growth for 6 consecutive quarters; and cargo revenue of US$274 million, up 29.1% year on year. Excluding fuel and special projects, the unit cost (CASM-ex) increased by only 3.0% year over year, which is the best performance among large networked airlines.

CEO Robert Isom said, “American Airlines achieved record third-quarter revenue and the strongest year-over-year revenue growth during my tenure. While historic fuel prices have had a significant impact on our financial results, our focus remains on restoring profitability and building a stronger American airline in the long term.”

Chief Financial Officer Devon May added, “Our long-term focus on efficiency underpins industry-leading cost per unit performance this quarter. We expect to lead the major network carriers in terms of the spread between unit revenue and CASM-ex growth throughout the year.”

In terms of outlook, American Airlines lowered the adjusted loss range per share for the full year 2026 from the previous forecast to $1.60-1.00, mainly due to fuel cost pressure far exceeding previous assumptions. The average fuel price for the fourth quarter is expected to be around US$4.70 per gallon (about double that of the same period in 2025), and fuel spending will increase by another US$2.8 billion year over year.