The Dow Jones Transportation Average will undergo a change on June 1, with FedEx Freight taking the place of American Airlines Group, according to an announcement from S&P Dow Jones Indices on Wednesday. The index operator noted that American Airlines' current weighting in the price-weighted index is less than half a percent, making its removal 'immaterial' to the average's performance.
American Airlines shares closed Wednesday at $14.92, up 0.5%, but that gain trailed the broader airline sector. United Airlines rose 6.3%, Delta Air Lines climbed 3.0%, and Southwest Airlines added 3.3%, as investors bet on strong travel demand offsetting higher costs.
CEO Robert Isom, speaking at a Bernstein investor event Wednesday, said the company is sticking with its lowered 2026 profit target despite a significant increase in fuel costs. American now expects full-year results ranging from a loss of $0.40 per share to earnings of $1.10 per share, down from its earlier forecast of $1.70 to $2.70. The company previously warned that jet fuel expenses—typically about a quarter of operating costs—could add $4 billion to $5 billion to its bill this year after geopolitical disruptions sent oil prices higher.
For the second quarter, American Airlines anticipates revenue growth of 15% on about 5% more capacity, translating to roughly 10% unit revenue growth. Isom noted the carrier is approximately 80% booked for the quarter, with corporate travel up 13% year-over-year and leisure demand remaining robust.
Despite these positive demand indicators, American continues to lag behind Delta and United in profitability—a gap that investors monitor closely. Isom outlined plans to close that gap by expanding premium seating, with premium seats expected to grow twice as fast as main-cabin seats, and lie-flat seats set to increase nearly 50% over three years.
In a separate development, American announced Tuesday it will equip over 500 narrow-body aircraft with Starlink Wi-Fi, starting in the first quarter of 2027. Chief Customer Officer Heather Garboden said the airline aims to partner with 'world-class partners like Starlink' as passengers increasingly expect fast in-flight connectivity.
Meanwhile, United Airlines CEO Scott Kirby pushed back on merger speculation Wednesday, stating that United is not pursuing a deal 'for the foreseeable future' after American reportedly turned down a potential merger approach.
The index change takes effect before the market opens on June 1. Investors will now watch whether summer bookings allow American to maintain pricing power and cover elevated fuel costs while hitting its revised profit targets.
