By Rajesh Kumar Singh and Shivansh Tiwary
CHICAGO, May 27 (Reuters) – American Airlines is sticking with its recently lowered full-year profit outlook despite a sharp jump in fuel prices, CEO Robert Isom said on Wednesday, as stronger revenue, premium demand and corporate travel help cushion the hit from rising fuel costs.
Isom, speaking at a Bernstein investor conference, said there was “no doubt” demand had a K-shaped pattern, with higher-income travelers outpacing middle- and lower-income customers.
Still, he said travel was growing across income groups, with American about 80% booked for the second quarter, corporate travel up 13% year over year and leisure demand “incredibly” strong.
American shares were up about 2% in late morning trade.
The carrier last month cut its 2026 profit forecast as jet fuel costs surged, saying it expected its fuel bill to rise by more than $4 billion this year. It forecast 2026 results ranging from a loss of 40 cents per share to a profit of $1.10 per share, down from its prior forecast for a profit of $1.70 to $2.70 per share.
Isom said the airline expected second-quarter revenue to rise 15% from a year earlier on about 5% capacity growth, implying roughly 10% unit revenue growth.
SPIRIT EXIT, PREMIUM PUSH
U.S. carriers are also benefiting from a tighter domestic market after Spirit Airlines’ exit reduced low-fare capacity and supported fares in some markets. Spirit, one of the industry’s fiercest discounters, ceased operations earlier this month after failing to secure creditor support for a U.S. government bailout plan.
Isom said American saw a short-term lift in basic-economy fare purchases after Spirit’s exit, though the effect had since evened out. Spirit represented only about 1.5% of the market at the time, he said.
Pressure on ultra-low-cost carriers reflected rising costs and a broader push by network airlines to compete across more fare segments through basic economy, loyalty programs, lounges and premium cabins, he said.
Isom said he was “not out here declaring ULCCs are dead,” but that American’s scale, network and product gave it an advantage as consumers continue to spend on travel experiences.
American is also adding more premium capacity, with Isom saying premium seating would grow at twice the rate of main cabin seating and lie-flat seats would increase nearly 50% over the next three years.
(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Gus Trompiz and Bill Berkrot)
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