American Airlines’ stock dropped 8% following the company’s lowered earnings forecast for 2026, driven by rising fuel costs that the airline has struggled to fully offset despite raising fares. The adjusted earnings per share guidance now spans from a loss of 65 cents to earnings of 65 cents, a downward revision from the prior estimate of a loss up to a gain of $1.10 per share. Earlier in the year, the outlook was even more optimistic, with expectations of earnings between $1.70 and $2.70 per share.

In its second-quarter report, American Airlines posted adjusted earnings of 15 cents per share, beating the 3 cents expected by analysts, with revenue rising 16% to $16.74 billion. However, profits fell sharply by 88% compared to the previous year, totaling $71 million versus $599 million a year earlier. The airline’s passenger revenue per available seat mile increased 10%, reflecting stronger pricing power despite the challenging environment.

CEO Robert Isom acknowledged the persistent profit gap between American Airlines and competitors Delta and United, which has widened over time. He affirmed the company’s commitment to long-term strategies, including expanding its flying capacity by up to 5% in the current quarter and plans to order new wide-body aircraft with more premium seats to improve profitability. While no specific timeline was given for closing the margin gap, Isom expressed confidence in the progress being made.

The volatility of fuel prices continues to weigh heavily on airline results, as fuel remains the second-largest expense after labor costs. Despite increased demand and higher ticket prices providing some relief, American’s latest earnings guidance for the current quarter points to an adjusted loss in the range of 70 to 10 cents per share, falling short of Wall Street's expectation of 28 cents. Revenue, however, is forecasted to rise between 16% and 19%, slightly exceeding analyst projections.