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CHICAGO: American Airlines is sticking with its recently lowered full-year profit outlook despite a sharp jump in fuel prices, CEO Robert Isom said on Wednesday, as stronger revenue, premium demand and corporate travel help cushion the hit from rising fuel costs.
Isom, speaking at a Bernstein investor conference, said there was “no doubt” demand had a K-shaped pattern, with higher-income travelers outpacing middle- and lower-income customers.
Still, he said travel was growing across income groups, with American about 80% booked for the second quarter, corporate travel up 13% year over year and leisure demand “incredibly” strong.
American shares were up about 2% in late morning trade.
The carrier last month cut its 2026 profit forecast as jet fuel costs surged, saying it expected its fuel bill to rise by more than $4 billion this year. It forecast 2026 results ranging from a loss of 40 cents per share to a profit of $1.10 per share, down from its prior forecast for a profit of $1.70 to $2.70 per share.
Isom said the airline expected second-quarter revenue to rise 15% from a year earlier on about 5% capacity growth, implying roughly 10% unit revenue growth.
US carriers are also benefiting from a tighter domestic market after Spirit Airlines’ exit reduced low-fare capacity and supported fares in some markets. Spirit, one of the industry’s fiercest discounters, ceased operations earlier this month after failing to secure creditor support for a US government bailout plan.
Isom said American saw a short-term lift in basic-economy fare purchases after Spirit’s exit, though the effect had since evened out. Spirit represented only about 1.5% of the market at the time, he said.
Pressure on ultra-low-cost carriers reflected rising costs and a broader push by network airlines to compete across more fare segments through basic economy, loyalty programs, lounges and premium cabins, he said.
Isom said he was “not out here declaring ULCCs are dead,” but that American’s scale, network and product gave it an advantage as consumers continue to spend on travel experiences. American is also adding more premium capacity, with Isom saying premium seating would grow at twice the rate of main cabin seating and lie-flat seats would increase nearly 50% over the next three years.
China stalls Airbus deliveries: China has been stalling the approval of Airbus deliveries to signal impatience with European regulators’ delay in certifying Chinese-made COMAC aircraft, Bloomberg News reported on Tuesday.
The Civil Aviation Administration of China (CAAC) has delayed final approval that would allow Airbus jets to enter the country and be put into service for the past several months, the report said, citing people familiar with the matter.
Airbus delivered the fewest commercial jets in the first quarter since 2009, according to the report. Chief Executive Guillaume Faury said last month the delay was due to an “administrative topic” that held up almost 20 aircraft destined for China.
On Airbus’ April 28 earnings call, Faury said the issue had been resolved and that the undelivered planes would be shipped in the second quarter.
Chief Financial Officer Thomas Toepfer said Airbus had built up around 5 billion euros ($5.82 billion) of inventory in the quarter, significantly more than the prior year, with the China delivery halt the main driver. He said the aircraft “had been built and were ready, but could not be delivered.”
In January, Reuters reported that Europe’s aviation safety regulator, EASA, had been carrying out test flights to assess COMAC’s C919 jet for certification, which would allow the Chinese planemaker to market the jet to Western airlines for the first time. At present, European and other Western carriers cannot fly COMAC’s jets.
In a statement, EASA said work on the validation of the C919 is “progressing with the full cooperation of COMAC and the CAAC,” but added that it could not comment on the expected timeline for completion of the validation project.
EASA safety certification would significantly expand COMAC’s global footprint, as the C919 competes directly with Airbus’ A320 and Boeing’s 737.
Airbus, CAAC and COMAC did not immediately respond to a Reuters request for comment. Reuters could not immediately verify the report.
Separately, Air India said Wednesday it will temporarily reduce or cut several domestic routes after making similar international cuts due to rising fuel prices from the Middle East war.
Iran’s effective closure of the Strait of Hormuz following US-Israeli strikes on Tehran on February 28 has sent aviation fuel prices soaring, raising concerns over carrier profitability and leading to a rise in airline fares.
“In continuation of our previously announced adjustments to select international services between June and August 2026, we have temporarily rationalised operations on certain domestic routes,” Air India said Wednesday.
“These adjustments are driven by the sustained impact of high fuel prices on overall operations,” it added.
Air India did say which routes or how many flights would be affected.
The Press Trust of India news agency, citing sources, suggested more than a fifth of the airline’s domestic flights could be impacted.
The airline said that the passengers hit by changes will be rebooked on alternative flights or offered full refunds.
“Air India will continue to monitor demand and operating conditions closely, with a view to restoring frequencies as conditions stabilise,” it said.
Air India announced earlier in May that it was suspending routes to Chicago, Shanghai, Male and Singapore from Indian cities including New Delhi, Mumbai and Chennai between June and August.
It also announced a cut in the frequency of flights to San Francisco, Paris, Milan and Sydney.
Since taking over Air India in 2022, the Tata conglomerate has embarked on an ambitious overhaul, ordering hundreds of aircraft and upgrading its ageing fleet.
Agencies
