Soaring Fuel Costs Weigh Heavily on Airlines, U.S. Carriers Consider Flight Cuts

United Airlines and American Airlines have stated that the aviation industry continues to face high fuel prices, and both companies may need to further reduce capacity in the fourth quarter.

Robert Isom, CEO of American Airlines, said on Wednesday (16th) at the Morgan Stanley conference in California: "If fuel prices continue to remain high, it will force us to make some adjustments in the future, particularly in terms of capacity planning."

Mike Leskinen, CFO of United Airlines, also said that if fuel prices remain elevated, the company will make "some adjustments for the first quarter of next year and beyond 2027."

"Our flights are not designed to maximize market share, but to maximize profitability and free cash flow, so we will make corresponding adjustments," said Leskinen.

American Airlines expects an additional $1 billion in fuel costs over the final three months of this year. The airline has benefited from its premium product strategy, with increasing revenue coming from high-end seats in the front of the cabin. The company said it remains very confident in its current financial guidance.

Earlier this year, United Airlines forecast adjusted earnings per share for the third quarter to be between $2.50 and $3.50, and projected an additional $6 billion in fuel costs for the full year 2026, with plans to offset some of these costs by year-end.

Earlier this year, United announced it would cut 5% of its scheduled flights in the second and third quarters, focusing on reducing underperforming off-peak routes, including mid-weekday and overnight flights, while also scaling back operations at Chicago O'Hare International Airport.

"There will be some flights we won't operate in December," said Leskinen.

With no signs of resolution in the U.S.-Iran conflict, analysts expect energy prices to remain elevated. Former U.S. President Trump acknowledged last week that the military conflict with Iran would end after the November U.S. midterm elections.

Brent crude oil prices have surged nearly 70% year-to-date, with even larger increases seen in refined products like diesel, reflecting supply risks from the Russia-Ukraine war and Middle East tensions.

Soaring costs are severely squeezing airline profit margins. Among major airline competitors, American Airlines faces the most visible pressure, having already downgraded its financial outlook twice this year.