American Airlines warns high fuel costs could add $1 billion and cut flights

  • American Airlines warned high fuel prices could reduce or cancel flights on less-profitable routes.
  • $1 billion in additional fourth-quarter expenses could result from higher fuel costs.
  • West Texas Intermediate rose 21.5% in one month to $102.59 per barrel.

American Airlines Chief Executive Robert Isom warned that sustained jet fuel prices could force the carrier to reduce or cancel flights on less-profitable routes. Speaking at a Morgan Stanley investment conference in Chicago, Isom said fuel costs could increase fourth-quarter expenses by roughly $1 billion, with every one-cent rise adding about $10 million. West Texas Intermediate crude has risen 21.5% over the past month to $102.59 a barrel, pressuring airline costs and carrier stocks. Higher airfares, premium products and increased first-class revenue have offset part of the increase, while American forecasts third-quarter revenue growth of 16% to 19%. Isom said he expects most recent revenue gains to endure but cautioned that these measures may not cover costs if fuel remains elevated. Analysts retain a consensus Moderate Buy rating, based on seven Buy, six Hold and one Sell recommendations, with an average $18.58 price target implying roughly 45% upside from current levels.

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