American Airlines, Spirit cut summer profit forecasts due to costs

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

Daniel Slim | Afp | Getty Images

American airlines And Spirit Airlines On Wednesday, joined other carriers in warning that rising costs would hit profits in the busy summer quarter.

American said it expects adjusted earnings per share to be between 20 and 30 cents in the third quarter, down from a previous forecast of 95 cents per share, citing more expensive fuel and a new labor agreement. pilot. The carrier cut its operating margin in half compared to its forecast at the beginning of the summer, from 4% to 5%.

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

Airlines have lost the pricing power they had last summer when capacity was more limited in the wake of the pandemic, even though demand has been strong.

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

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

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

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