American Airlines Group Inc. (AAL) shares hovered near flat in early premarket trading Friday, steadying after Thursday's steep decline, as the carrier announced temporary route cuts for August and September in response to elevated jet fuel prices. AAL was quoted at $13.32 at 7:01 a.m. EDT, up 0.1% before the Nasdaq open, following a 1.99% drop to close at $13.30 on Thursday. The stock has fallen for four consecutive sessions, from $14.64 at the start of the week to its current level, a decline of roughly 9.2%.
Route Adjustments and Fuel Cost Pressures
The airline confirmed to CBS News that it has adjusted schedules on select routes for late summer, citing higher fuel costs. These moves are described as temporary and not permanent. Affected routes include flights from Los Angeles to Cleveland, Columbus, Pittsburgh, and Washington Dulles, as well as from Charlotte to Ontario and Sacramento. Travelers on impacted flights will be offered alternative options or refunds, according to the company.
Jet fuel prices have surged to an average of $142 per barrel last week, according to the Associated Press, sharply above the pre-February level of about $99 before U.S. and Israeli strikes on Iran rattled energy markets. Fuel represents between 25% and 30% of airline operating expenses, making even small route cuts a sign that certain flights are no longer viable at current prices.
Earnings Outlook and Market Context
American Airlines maintained its mixed earnings outlook. In April, the company forecast second-quarter revenue growth of 13.5% to 16.5% year-over-year, with available seat miles—a key capacity metric—up 4% to 6%. Adjusted earnings per share for the quarter are expected to range from a loss of $0.20 to a profit of $0.20. For the full year, the airline sees adjusted earnings between a loss of $0.40 and a profit of $1.10.
CEO Robert Isom told the Bernstein conference last week that the airline is not altering its outlook despite an anticipated $4 billion to $5 billion in extra fuel expenses this year. He noted corporate travel is up 13% year-over-year and leisure demand remains robust, but acknowledged a K-shaped split in demand, with higher-income travelers showing more strength.
Broader Market and Competitive Landscape
Broader markets were mixed ahead of the May jobs report. Dow futures edged up 0.22%, while S&P 500 futures slipped 0.34% and Nasdaq 100 futures dropped 0.82%. Deutsche Bank strategist Jim Reid noted the jobs data would keep inflation focus for the Federal Reserve if the labor market remains steady.
American Airlines has lagged rivals Delta Air Lines and United Airlines in profitability for years. On Thursday, Southwest shares rose 1.08%, Delta added 0.93%, United dipped 0.19%, and American lost 1.99%, according to MarketWatch data. The carrier is pushing more into premium seats and upgrades to boost revenue.
Industry Outlook and Analyst Views
Airline executives are set to gather in Rio de Janeiro from June 6 to 8 for the International Air Transport Association summit, where fuel prices, route detours, and aircraft delays are expected to dominate discussions. Moody's recently lowered its global airline sector outlook to negative, citing fuel costs from the Iran conflict and Strait of Hormuz issues as threats to this year's operating profit.
If fuel costs ease and bookings hold, the route cuts may simply reflect disciplined capacity management rather than demand weakness. However, the bigger risk is persistent high fuel, a drop-off in lower-income travelers, and further schedule reductions, which could squeeze margins before American catches up to Delta and United's profitability.
