By Rajesh Kumar Singh and Shivansh Tiwary
CHICAGO, May 27 (Reuters) – American Airlines is sticking with its recently lowered full-year profit outlook despite a sharp jump in fuel prices, CEO Robert Isom said on Wednesday, as stronger revenue, premium demand and corporate travel help cushion the hit from rising fuel costs.
Isom, speaking at a Bernstein investor conference, said American was “not making any changes” to its outlook even as higher fuel prices are expected to add $4 billion to $5 billion to its costs this year.
He said there was “no doubt” demand had a K-shaped pattern, with higher-income travelers outpacing middle- and lower-income customers.
Still, Isom said travel was growing across income groups, with American about 80% booked for the second quarter, corporate travel up 13% year over year and leisure demand “incredibly” strong.
American shares were up about 1% in afternoon trade.
The carrier last month cut its 2026 profit forecast as jet fuel costs surged, saying it expected its fuel bill to rise by more than $4 billion this year. It forecast 2026 results ranging from a loss of 40 cents per share to a profit of $1.10 per share, down from its prior forecast for a profit of $1.70 to $2.70 per share.
Isom said the airline expected second-quarter revenue to rise 15% from a year earlier on about 5% capacity growth, implying roughly 10% unit revenue growth.
REVENUE PUSH
American has trailed Delta Air Lines and United Airlines on profitability for years, a gap that has drawn scrutiny from its unions and investors.
The airline has ramped up investments in premium products and customer experience as part of its effort to lift revenue and narrow that gap.
American is adding more premium capacity, with Isom saying premium seating would grow at twice the rate of main cabin seating and lie-flat seats would increase nearly 50% over the next three years.
Isom said the carrier’s earnings recovery depends on its revenue performance. He said American expects to retain much of its recent revenue improvement, helped by premium buy-ups, sales and distribution changes, stronger hubs and bag-fee revenue.
Despite standing by a forecast that ranges from a loss to a profit, Isom said American still expects to “repeat the profitability we had last year.”
SPIRIT EXIT
U.S. carriers are also benefiting from a tighter domestic market after Spirit Airlines’ exit reduced low-fare capacity and supported fares in some markets. Spirit, one of the industry’s fiercest discounters, ceased operations earlier this month after failing to secure creditor support for a U.S. government bailout plan.
Isom said American saw a short-term lift in basic-economy fare purchases after Spirit’s exit, though the effect had since evened out. Spirit represented only about 1.5% of the market at the time, he said.
Pressure on ultra-low-cost carriers reflected rising costs and a broader push by network airlines to compete across more fare segments through basic economy, loyalty programs, lounges and premium cabins, he said.
Isom said he was “not out here declaring ULCCs are dead,” but that American’s scale, network and product gave it an advantage as consumers continue to spend on travel experiences.
(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Gus Trompiz and Bill Berkrot)
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