American, United prepare further capacity trims as fuel shock reshapes flying

CHICAGO — American Airlines and United Airlines are preparing to trim flying further if fuel prices remain elevated, ​as carriers try to protect profits from a fresh surge in costs.

The airline industry has been leaning on tighter capacity, resilient demand and higher fares to absorb a run-up in fuel costs since the Iran war ‌began.

Executives at American and United said on Wednesday that demand remained strong even after price increases, allowing the carriers to recover much of the higher fuel expense. ⁠But the latest jump in fuel is prompting them ​to reassess less-profitable flying late this year and, potentially, into ⁠2027.

American said the latest jump in fuel prices alone was adding about $1 billion to its fourth-quarter costs, while United said some ‌flights planned for December would ‌no longer operate and that further adjustments could follow in the first quarter and into 2027.

The moves ⁠underscore how the fuel shock continues to reshape airline capacity even as demand ⁠remains resilient. They also point to a broader industry response: protect pricing where demand allows and remove flights whose economics deteriorate as costs rise.

American sees durable revenue gains

American CEO Robert Isom said at a Morgan Stanley conference that he felt "really good" about the carrier's forecast for third-quarter revenue to rise 16% to 19% from a year earlier and expected the vast majority of the recent revenue gains to prove durable.

Revenue strength was broad-based across domestic and international ‌markets and both premium and coach cabins, he said.

"We've absolutely done a great job ​of recapturing a tremendous amount of that expense," Isom said of the higher fuel bill.

Speaking at the same conference, American CFO Devon May said fourth-quarter fuel prices had risen roughly $1 a gallon from the level assumed in July. Every 1-cent move in fuel changes American's quarterly costs by about $10 million, producing what May called a roughly $1 billion fourth-quarter run-up.

American would continue adjusting capacity late in the fourth quarter in response to the increase, May said.

Fuel shock forces capacity response

United is taking a similar approach. Its chief financial officer, Michael Leskinen, said some flights that had been ​planned for December would no longer operate because higher fuel costs had made marginal routes less attractive.

If fuel remains high, United could make further adjustments ‌in the first ‌quarter and into 2027.

"We ⁠are not flying to maximize market share. We're flying to maximize profitability and free cash generation," Leskinen told the Morgan Stanley conference.

The capacity response is occurring without clear signs of a broad pullback in travel demand. Leskinen described United's fourth-quarter bookings as "tremendously strong" and said there was very little evidence of demand destruction. Premium travel remained strong, corporate business was improving and economy demand was ‌also holding up.

He said United still ​expected to recover the higher fuel expense through pricing, though with a ‌lag.

Leskinen said prolonged high fuel prices ⁠could accelerate broader changes ​in the industry by putting greater financial pressure on weaker carriers.

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