American Airlines Group (NASDAQ:AAL) reported better-than-expected second-quarter earnings on Thursday, but its shares fell more than 5% in premarket trading after the carrier issued a weaker-than-anticipated profit outlook for the third quarter and the full year.
While record revenue reflected continued demand for travel, higher fuel costs weighed on the company’s earnings forecast.
Second-quarter earnings exceed expectations
American Airlines posted adjusted earnings of $0.15 per share for the second quarter, well above analysts’ consensus estimate of $0.03.
Revenue reached a record $16.7 billion, an increase of 16.3% from the same period last year and broadly in line with Wall Street expectations.
Despite the stronger quarterly performance, investors focused on the company’s cautious guidance, sending the stock lower in premarket trading.
Fuel costs pressure outlook
American Airlines now expects adjusted earnings per share for fiscal 2026 to range between a loss of $0.65 and a profit of $0.65, citing the continued impact of elevated fuel prices.
For the third quarter, the airline forecast adjusted earnings of between a loss of $0.70 and a loss of $0.10 per share. The midpoint of that outlook is significantly below analysts’ consensus forecast of a $0.61 profit per share.
Management expects third-quarter revenue to increase between 16% and 19% year over year.
Chief Executive Officer Robert Isom said, “American delivered year-over-year revenue growth of more than 16% in the second quarter, exceeding our initial expectations and continuing the momentum we’ve built across the business.”
He added, “This performance reflects the strength of our commercial strategy, driven by our four pillars: elevate the customer experience, grow the global network, drive premium revenue and lead in loyalty.”
Strong demand offsets part of fuel headwinds
Fuel expense increased by $2.2 billion during the quarter, representing an 83% rise compared with a year earlier.
The company said it was able to offset nearly half of the higher fuel costs through increased ticket prices.
Based on the forward fuel curve as of July 21, American Airlines expects third-quarter fuel expense to increase by approximately $1.7 billion year over year, with an average fuel price of about $3.75 per gallon.
Premium and corporate travel remain resilient
Premium passenger unit revenue rose 13.4% from the prior year, while Main Cabin unit revenue increased 8.8%.
Managed corporate revenue climbed 26%, extending the airline’s streak of double-digit growth in that segment to five consecutive quarters.
American Airlines ended the second quarter with total available liquidity of $11.3 billion, providing the company with a solid financial position despite rising operating costs.
American Airlines stock price
