An American Airlines plane takes off above Spirit Airlines planes and other aircraft at Los Angeles International Airport (LAX) on June 1, 2023 in Los Angeles, California.
Mario Tama | Getty Images
American Airlines and Spirit Airlines on Wednesday joined other carriers in warning that higher costs will hit profits in the course of the bustling summer quarter.
American said it expects adjusted earnings per share to are available between 20 cents and 30 cents within the third quarter, down from a previous forecast of as much as 95 cents a share, citing dearer fuel and a recent pilot labor deal. The carrier halved its operating margin from a forecast earlier this summer to 4% to five%.
Spirit Airlines expects negative margins of as much as 15.5% within the three months ending Sept. 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 commanded last summer when capability was more constrained coming out of the Covid pandemic, regardless that demand has been strong.
Now they face what’s traditionally a slower travel demand period. Frontier Airlines warned Wednesday that “in recent weeks, sales have been trending below historical seasonality patterns,” and forecast an adjusted loss for the quarter.
Shares of American, Spirit and Frontier fell Wednesday. Frontier’s stock hit a recent 52-week low.
Fare-tracking company Hopper on Tuesday said it expects fares to proceed dropping in the autumn shoulder season, with domestic U.S. tickets averaging $211 in September and October, down 30% from the height of summer.
Southwest Airlines and Alaska Airlines cut their third-quarter forecasts earlier this month.
Airlines start reporting third-quarter leads to mid-October.
