United States: airlines reduce their forecasts due to fuel prices

Avatar photo

Several American airlines have reduced their margin forecast for the third quarter of 2023 due toincreased fuel costs.

American Airlines, Southwest Airlines, United Airlines, Spirit Airlines, Frontier, Alaska Air… All have observed drop in reservations alongside operating cost increases linked to rising fuel prices in the current quarter, as oil prices rose due to prolonged production cuts by Saudi Arabia and Russia.

The low cost Frontier reported “recent and unexpected change in booking trajectory” : “In recent weeks, sales have tended to be lower than historical seasonal trends“, she admitted.

The low cost Spirit Airlines has lowered its third-quarter revenue forecast to account for rising fuel prices, with third-quarter revenue now between $1.24 billion and $1.25 billion, compared to a previous estimate of $1.3 billion to $1.32 billion. To sell more tickets, it says it will offer deep discounts for trips booked for the second half of the third quarter through the travel period before Thanksgiving in November.

American Airlines said it expects earnings of 20 to 30 cents per share for the current quarter, compared with an earlier forecast of 85 to 95 cents per share, sending its shares down 4%. The airline also lowered its forecast for total revenue per available seat mile, an indicator of pricing power.

These downward forecasts come against the backdrop of the first signs ofweakening demand for domestic travelinflationary pressures weighing on consumers and costly contracts that airlines sign to retain their staff.

John Walker Avatar