NEW YORK, Oct. 22 (Xinhua) -- As major U.S. airlines reported their third-quarter (Q3) operating results, rising fuel costs put pressure on their profit margins despite strong travel demand.
Despite record-breaking revenues and strong travel demand, higher operating costs continue to eat up profit and weaken earnings expectations heading into the final quarter of 2026.
American Airlines reported a net loss of 269 million U.S. dollars in Q3, despite generating record revenues of 16.3 billion dollars.
Its fuel expense increased by 1.9 billion dollars, or 67.5 percent, with an average fuel cost of 3.85 dollars per gallon.
The carrier expects to pay 4.7 dollars per gallon in the fourth quarter, nearly double the price paid in the fourth quarter of 2025, with quarterly fuel expenses projected to increase by approximately 2.8 billion dollars year over year.
American Airlines also lowered its full-year outlook, forecasting an adjusted loss of 1 to 1.6 dollars per share, compared with its previous projection of a loss of 65 cents to a profit of 65 cents per share.
Southwest Airlines, on the other hand, reported a similar challenge on Wednesday, even as its Q3 earnings exceeded Wall Street expectations.
The Dallas-based carrier generated a net income of 270 million dollars with operating revenues rising 21.2 percent to 8.4 billion dollars, a third-quarter company record, according to a press release from Southwest Airlines.
However, the fuel expenses of Southwest Airlines increased by 821 million dollars compared with the same period last year, and its Q3 fuel cost was 3.92 dollars per gallon, which is above the prior assumptions of 3.7-3.75 dollars per gallon.
"Demand remained strong as we lapped last year's bag fee and other commercial initiatives, reinforcing our belief that the earnings power we've built is durable, even with significantly higher fuel costs," said Southwest Airlines CEO Bob Jordan in the company's Q3 revenue press release. "We remain confident in our ability to further strengthen earnings, improve returns, and expand margins over time."
Southwest Airlines assumed a fourth-quarter 2026 fuel cost of approximately 4.55 dollars per gallon based on the forward curve as of Oct. 15, 2026.
United Airlines on Tuesday reported its Q3 revenue of 17.9 billion dollars, up 17.4 percent year on year, with net income reaching 1 billion dollars. However, its fuel expenses increased by 1.8 billion dollars, or 62 percent, compared with the same period last year, according to the company's third-quarter earnings release.
United Airlines expects to pay approximately 4.8 dollars per gallon for fuel in the fourth quarter, compared with 3.9 dollars in Q3. The carrier forecasts adjusted earnings of 50 cents to 1.5 dollars per share for the fourth quarter, which is below Wall Street expectations.
