Gen Z travelers are cutting back on meals, haircuts and daily expenses to be able to travel, while homeownership and other traditional milestones seem increasingly out of reach.
American Airlines issued a warning that airfares were likely to remain high even if oil prices fell after the company suffered losses earlier in the year due to rising fuel prices.
The carrier’s chief financial officer, Devon May, told the Financial Times that “if fuel goes down, I think airfares are likely to stay largely where they are now.”
“If fuel prices go up, we need to generate higher returns, we need to generate higher rates to offset that increase in fuel prices,” May said.
American Airlines reported third-quarter earnings on Thursday, reporting wider losses in 2026 and updating its guidance to reflect anticipated losses of between $1 and $1.60 per share on an adjusted basis this year. Its forecast for July ranged from a loss of 65 cents to a profit of 65 cents.
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American Airlines forecasts bigger losses in 2026 due to rising fuel costs. (Kevin Carter/Getty Images)
May told the FT that airline ticket prices had not fully recovered in real terms since the disruption caused by the COVID-19 pandemic, saying price rises “should ideally have happened in 2024, but the industry found itself in an environment of oversupply”.
“This was the first year where everything came together in such a way that we were able to get yields back to where they were seven years ago in real terms,” May told the outlet.
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American Airlines said it expects rising fuel costs to persist into the fourth quarter. (Daniel Slim/AFP via Getty Images)
The company reported a 19% year-over-year increase in third-quarter revenue, which was higher than the upper end of its previous guidance range and was the highest in the company’s history when excluding the post-pandemic years.
However, fuel spending in the third quarter jumped 67.5% compared to the same period last year, resulting in a $1.9 billion increase in fuel costs based on an average price of $3.85 per gallon.
American also expects rising fuel prices to continue into the company’s fourth quarter, with the carrier expecting to face an average fuel price of around $4.70 per gallon – a figure that would nearly double the price in the fourth quarter of 2025 and increase fuel spending by $2.8 billion year over year.
AMERICAN AIRLINES BETS BIG ON INTERNATIONAL FLIGHTS WITH 7 NEW ROUTES
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Due to high fuel prices, American said it expects its network growth to slow in 2027 compared to 2026 levels.
Rising fuel prices have led to higher airfares, with the most recent data from the Bureau of Labor Statistics showing airfares increased 22.4% from a year ago in September.
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