American Airlines Group (NASDAQ:AAL) reported better-than-expected third-quarter profits but adjusted its full-year earnings outlook downwards, citing the impact of rising jet fuel prices.
The airline posted a profit of $0.38 per share for the third quarter on revenue of $13.5 billion, surpassing the $0.25 estimate from analysts but matching revenue expectations.
However, American lowered its annual earnings forecast to between $2.25 and $2.50 per share, down from the previous projection of as much as $3.75.
The airline industry is grappling with a 26% increase in jet fuel prices since June, which is a significant expense for carriers.
American Airlines also cited higher labor costs due to a recent labor contract with its pilots as a contributing factor to its lowered earnings forecast.
Despite the challenges, American Airlines reported strong demand for long-haul flights as a stronger dollar encouraged more Americans to plan trips abroad for leisure and recreation. Bookings for the upcoming holiday season were reported as stronger than the previous year.
In contrast to American Airlines' performance, United Airlines and Delta Air Lines (NYSE:DAL), which reached similar labor agreements with their pilots, both reported profits of $1.1 billion each in the third quarter.
Rising fuel prices have become a concern for the industry as they coincide with a slowdown in travel. United Airlines issued a weak end-of-year forecast due to higher fuel costs and the suspension of flights to Tel Aviv during the Israel-Hamas war.