American Airlines Group Inc. (NASDAQ: AAL) saw its shares tumble 4.8% to close at $13.42 on Wednesday, as investors focused on the mounting pressure from surging jet fuel prices. The decline came amid a broad sell-off in airline stocks, with Delta Air Lines (DAL) falling 5.79%, United Airlines (UAL) losing 6.25%, and Southwest Airlines (LUV) slipping 4.10%. The broader market also weakened, with the S&P 500 dropping 1.62% and the Dow Jones Industrial Average losing 1.87%.
The fuel cost headwind is particularly acute for American Airlines, which has guided for jet fuel prices to remain near $4 per gallon throughout 2026. At these levels, the company expects fuel expenses to exceed $4 billion higher than last year, threatening to offset the revenue gains the carrier is targeting. American's full-year adjusted earnings per share guidance now ranges from a loss of $0.40 to a profit of $1.10, contingent on sustained high oil prices.
Energy prices have been under upward pressure, with Brent crude hovering near $92.57 per barrel, supported by rising U.S.-Iran tensions and concerns over the Strait of Hormuz, a critical oil transit chokepoint. U.S. crude inventories fell by 7.2 million barrels for the week ended June 5, exceeding analyst expectations and adding to supply worries.
American Airlines had previously indicated in April that its second-quarter outlook was based on fuel costs around $4 per gallon, and that it could only partially recapture those higher costs through fares and fees. The carrier reported record first-quarter revenue of $13.9 billion but booked a GAAP net loss of $382 million, or $0.58 per diluted share, underscoring the margin squeeze from fuel.
Despite the near-term challenges, CEO Robert Isom expressed confidence in demand trends, telling Reuters in late May that the company is “not making any changes” to its 2026 outlook, citing stronger revenue, rising premium demand, and a rebound in corporate travel. American expects second-quarter revenue to increase 15% year-over-year, with capacity up about 5%. The airline has been investing heavily in premium seating, with lie-flat and Premium Economy seats growing at more than double the rate of Main Cabin seats, while AAdvantage enrollments jumped 25% from a year ago.
However, Wednesday's price action suggests investors are demanding concrete results rather than guidance. American's debt load remains substantial at $34.7 billion, though that is its lowest since mid-2015. The company reported $10.8 billion in liquidity, including cash and borrowing lines. In a recent SEC filing, American disclosed that shareholders approved an amendment to its 2023 incentive award plan, increasing the share reserve by 16.5 million common shares, with an additional 6.5 million shares potentially available under the same plan.
The airline also faced a symbolic setback when it was removed from the Dow Jones Transportation Average effective June 1, replaced by FedEx Freight Holding. S&P Dow Jones Indices noted that American's weight in the price-weighted index was under half a percent due to its low share price, making the change more symbolic than substantive.
Looking ahead, American's second-quarter guidance calls for revenue growth of 13.5% to 16.5% and adjusted EPS ranging from a loss of $0.20 to a profit of $0.20. If jet fuel costs remain elevated, that tight earnings range will be closely watched by investors. The airline's ability to pass on higher costs to travelers without dampening demand will be a key factor in determining its financial performance in the coming months.
