July 23 (Reuters) – American Airlines cut its full-year profit forecast on Thursday as renewed U.S.-Iran fighting pushed oil prices higher again, adding to its fuel bill.
The carrier now expects an adjusted loss of 65 cents per share to an adjusted profit of 65 cents per share, compared with its previous forecast of an adjusted loss of 40 cents to a profit of $1.10 per share.
Shares of the airline fell about 4% in premarket trading.
The move highlights how volatile fuel markets have complicated earnings forecasts for airlines, as renewed U.S.-Iran fighting and reduced traffic through the Strait of Hormuz cloud the outlook for oil and jet fuel costs. The strait carried about a fifth of global oil and gas shipments before the war.
Jet fuel surged above $5 per gallon during the spring before retreating sharply in June, following a truce between Washington and Tehran. Oil prices have climbed again since the fragile agreement collapsed in early July, renewing upward pressure on airline fuel costs.
American paid an average of $4.05 per gallon for fuel in the second quarter, compared with the approximately $4 per gallon assumed in its April guidance. For the third quarter, it expects to pay $3.75 per gallon, based on the forward fuel curve as of July 21.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Joyjeet Das)
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