Just weeks ago, American Airlines was on track for one of its best years in a decade. Now, a sudden spike in jet fuel prices has wiped out much of that progress, and the airline’s top executive is being direct about what that means for the rest of 2026.
During the company’s second-quarter earnings call on July 23, Isom and his leadership team laid out how fast the fuel picture has changed and why it’s forcing tough decisions on flights, spending, and growth plans.
Fuel costs surge faster than expected
American’s (AAL) fuel bill jumped by more than $2.2 billion in the second quarter, an 83% increase from a year earlier.
Chief Financial Officer Devon May explained that the situation is still getting worse. Since the start of July, the airline’s fuel forecast has climbed even higher.
“Since the beginning of July, expected third quarter fuel expense has increased by more than $700 million for the quarter and nearly $1.6 billion for the remainder of the year,” May stated.
Based on current market pricing, American expects to pay about $3.75 per gallon for jet fuel in the third quarter.
That would add another $1.7 billion in fuel costs compared to last year, just for that quarter.
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To put the full picture in perspective, Isom said the airline now expects almost $6 billion in extra fuel costs for all of 2026 compared to last year.
That’s a staggering number, and it’s why American’s profit outlook has changed so dramatically in such a short time.
“Even against an expected nearly $6 billion year-over-year fuel headwind, we anticipate full year adjusted earnings to be break-even at the midpoint of our guidance range,” Isom said.
Just three weeks before the call, the company had been expecting to post nearly $1.5 billion in profit for the year. Now it’s guiding toward break-even results instead.
American Airlines cuts flights to manage the damage
Amid rising fuel costs, airlines can either raise ticket prices or fly fewer planes to limit losses. American Airlines is eyeing both options and expects flight cuts to be the bigger near-term lever.
The airline already trimmed its third-quarter growth plans. Instead of flying more seats, American now expects capacity to grow only 3% to 5% compared to last year, about two points lower than originally planned.
Isom didn’t shy away from explaining why the company is adjusting so quickly, and pointed to how unpredictable fuel prices have become.
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“There’s been a tremendous amount of volatility in the fuel curve,” Isom said. “Just three weeks ago, we would have been projecting a forecast that [was] considerably different.”
He added that the airline is already reviewing plans for the fourth quarter and will keep adjusting flight schedules as needed.
American has a long history of reacting quickly to fuel swings, and Isom made it clear that pattern isn’t changing now.
Strong ticket sales soften the blow
American’s revenue is growing at a healthy pace, and that’s helping offset a good chunk of the fuel damage.
- Total revenue rose 16.3% in the second quarter compared to a year ago. That’s a strong number for any airline, and it came from higher demand across every region American flies to, along with more customers paying for premium seats.
- Premium ticket sales, which include business class and extra legroom seating, grew 19% during the quarter.
- Corporate travel spending also jumped 26% from last year, marking five straight quarters of double-digit growth in that category.
Chief Commercial Officer Nat Pieper said this demand is showing no signs of slowing down heading into the busy summer travel season.
Because of that revenue strength, American was able to cover nearly half of its higher fuel costs in the second quarter.
Without that ticket sales boost, the company’s financial picture would look considerably worse.
What’s next for AAL stock
American still expects to generate positive cash flow this year, allowing it to lower balance sheet debt.
The company also ended the quarter with $11.3 billion in available cash, giving it some cushion to manage further fuel swings.
Isom remains confident that once fuel prices settle down, American’s cost management and strong ticket sales will translate into real profit growth.
But for now, the message from leadership is clear. Fuel prices are the biggest obstacle standing between American and a much stronger year, and the airline is making real-time adjustments to deal with it.
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