American Airlines Group (NASDAQ:AAL) and Spirit Airlines led a decline in US airline stocks on Wednesday after they cut third-quarter guidance, citing rising jet fuel costs and price cuts.
In a filing with the US Securities and Exchange Commission (SEC), American Airlines said it expected revenue for the quarter to be flat, while total revenue per available seat mile (TRASM) is likely to be down by between 5.5% and 6.5%, from its previous guidance of a 4.5% to 6.5% decline.
Adjusted earnings per share are likely to be in a range of $0.20 and $0.30, down from its previous guidance of $0.85 to $0.95, the carrier said.
“Fuel prices have increased considerably since the company’s initial third-quarter guidance issued on July 20, 2023,” American Airlines.
“The company now expects to pay an average of between $2.90 and $3.00 per gallon of jet fuel in the third quarter (up from previous guidance of $2.55 to $2.65)."
In addition to fuel price increases, Spirit Airlines said: “During the last few weeks, the company has seen heightened promotional activity with steep discounting for travel booked for the second half of the third quarter through the pre-Thanksgiving travel period. As such, the company has reduced its third-quarter 2023 outlook.”
Spirit now expects total revenues of $1.245 billion and $1.255 billion for the quarter, down from its previous guidance of $1.3 billion to $1.32 billion. Fuel costs are likely to average $3.06 per gallon from $2.80 previously, the airline told investors in its SEC filing.
American Airlines shares were down 4.1% at $13.53 in early trading, while Spirit Airlines declined 3.7% to $16.95. Delta Air Lines fell 3.6% to $39.52 and United Airlines was 3.1% weaker at $46.12.
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