<\/p>\n
A worker refuels an American Airlines jet at DFW International Airport. The Fort Worth-based airline cited rising fuel costs as a reason for a quarterly net loss of $182 million.<\/p>\n
2015 File Photo\/The Associated Press<\/p>\n
American Airlines<\/a> executives said Thursday that the Fort Worth carrier is working as fast as it can to return to profitability at a speedier rate, as concerns over financial underperformance continue to grow.\u00a0<\/p>\n \u201cWe\u2019re moving in the right direction and with urgency,\u201d\u00a0CEO Robert Isom<\/a> said during the airline\u2019s third-quarter earnings call. \u201cWe\u2019re not satisfied with the loss, no matter the reason and we will do better.\u201d\u00a0<\/p>\n Isom\u2019s comments came as American, the dominant carrier at\u00a0DFW International Airport<\/a>, disclosed<\/a> record third-quarter revenue of $16.3 billion, a 19.3% increase year-over-year. Yet, American reported an adjusted net loss of $182 million. American also reported that it expects an adjusted loss of 50 cents and $1.10 per share in the fourth quarter and a full-year adjusted loss between $1 and $1.60.<\/p>\n Article continues below this ad<\/p>\n The airline did net a few positives during the third quarter. Premium revenue rose 22.9%, and main cabin revenue rose 19.5%. Enrollments in American\u2019s popular frequent flyer program, AAdvantage, also increased 27.4% year-over-year.\u00a0<\/p>\n The Iran War has sent fuel prices soaring during the year. In turn, airlines have sought to compensate for that extra expense by increasing bag fees and raising fares. American\u2019s fuel expenses for the third quarter increased $1.9 billion, or 67.5% year-over-year, the airline said.\u00a0<\/p>\n \u201cIf you look at the forward curve today, it would effectively tell you that jet fuel prices are going to be over $4 a gallon at least for the first half of [2027],\u201d American chief financial officer Devon May said in an interview. \u201cIt starts to ease in the second half, but that\u2019s the forelook right now. That is a higher fuel environment than where we expected it to be 60 days ago.\u201d\u00a0<\/p>\n Success of rivals<\/p>\n Pressure for American to increase its performance continues to rise. The airline has recently reshuffled its top leadership ranks with the announcement of a\u00a0new network planning chief<\/a> and a new leader for technical operations<\/a>. Several other executives, including cChief commercial officer Nat Pieper<\/a>, have taken on added responsibilities. The airline\u2019s vice chair and chief strategy officer, Steve Johnson, is retiring<\/a> at the end of the year.\u00a0<\/p>\n Article continues below this ad<\/p>\n But American\u2019s chief competitors at United Airlines and Delta Air Lines continue to succeed despite the fuel drag. Earlier this week, United reported a third-quarter<\/a> net income of just over $1 billion, while Delta reported a net income<\/a> of $756 million. Southwest Airlines<\/a>, which is based at Love Field<\/a>, also reported net income of $270 million.<\/p>\n \u201cSomething\u2019s not adding up at American Airlines,\u201d said Dennis Tajer, a spokesperson for the Allied Pilots Association<\/a>, the union that represents American\u2019s pilots. \u201cThe same cloud layer is over the same golf course that Delta [and] United play, but American has a vastly different score.\u201d\u00a0<\/p>\n \u201cClearly there\u2019s something more at American Airlines that makes it a unique underperformer versus Delta [and] United, and we believe that it is a failure of proper revenue management \u2026 an obsessive view on market share versus actually focusing on yield.\u201d<\/p>\n American plans to cut its capacity growth in 2027 in comparison with this year in response to the high cost of fuel.\u00a0<\/p>\n \u201cWe have to continue to push on yields,\u201d May said. \u201cWe\u2019re posting a loss here in the fourth quarter. That\u2019s not acceptable. So we\u2019re making some adjustments to capacity and then we need to continue to deliver on our revenue initiatives to be making sure we\u2019re offering a product to our customers that they\u2019re willing to pay more for.\u201d<\/p>\n Article continues below this ad<\/p>\n Isom said that the \u201csignificant increase\u201d in fuel prices offset \u201cthe strongest quarterly revenue growth of my career.\u201d<\/p>\n \u201cWe produced a loss in the quarter that, but for this fuel spike, would have been solidly profitable.\u201d He added during the call that he was confident in the airline’s chances to bounce back in 2027.\u00a0<\/p>\n \u201cOf course we think we could be profitable next year and that\u2019s driven by what we\u2019ve seen this year,\u201d Isom said.\u00a0<\/p>\n \u2018Plenty of questions\u2019<\/p>\n However, some industry analysts questioned whether a return to profitability next year is possible.\u00a0<\/p>\n Article continues below this ad<\/p>\n \u201cIn a challenging operating environment, peers have proven a higher earnings floor, while the jury is still out on American, whose outcome hinges largely on fuel at any given moment,\u201d Melius Research said in a note released after the earnings call.\u00a0<\/p>\n The note did acknowledge the airline\u2019s premium unit revenue improvement, but said, \u201cStill, there are plenty of questions about American\u2019s ability to return to sustained profitability in 2027.\u201d<\/p>\n Tajer added: \u201cAmerican is always about next year. And then when you get to next year, it\u2019s always about next year. It\u2019s a never-ending cycle.\u201d\u00a0<\/p>\n Amid the financial struggles, American over the past several months has announced significant investments to drive more revenue to match its competitors. It has announced the return of seatback screens<\/a>, completed the first retrofit of its most premium Boeing 777 aircraft<\/a>, and plans to have Starlink Wi-Fi across more than 1,000 mainline planes<\/a>.\u00a0<\/p>\n Article continues below this ad<\/p>\n<\/p>\n