American Airlines, Spirit cut summer profit forecast

  • Higher fuel and other costs bite airlines’ profits in the third quarter.
  • American and Spirit joined Alaska and Southwest in cutting profit estimates for the summer.

An American Airlines plane sits at the gate at Ronald Reagan Washington National Airport (TCA) on February 23, 2023 in Arlington, Virginia.

Daniel Slim | Afp | Good pictures

American Airlines and Spirit Airlines joined other carriers on Wednesday in warning that higher costs would hurt profits in the busy summer quarter.

American said it expects adjusted earnings per share to come in between 20 cents and 30 cents in the third quarter, citing expensive fuel and a new pilot labor contract. The carrier cut its operating margin in half to 4% to 5% from a forecast earlier this summer.

Spirit Airlines expects negative margins of 15.5% in the three months ending September 30, down from a previous estimate of -5.5% to -7.5%. The budget airline also cut its revenue forecast In the third quarter.

Although demand has been strong, airlines have lost the pricing power they commanded last summer, when capacity was severely restricted due to the pandemic.

Fare-tracking firm Hopper said on Tuesday it expects fares to continue to fall during the fall shoulder season, with domestic U.S. tickets averaging $211 in September and October, down 30% from the summer peak.

Shares of American and Spirit were lower in premarket trading on Wednesday. Southwest Airlines and Alaska Airlines cut their third-quarter forecasts earlier this month.

Airlines begin reporting third-quarter results in mid-October.

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