American Airlines' stock fell 5% during intraday trading on Friday, as investors reacted to concerns about rising fuel costs impacting the airline's profitability.

The decline follows reports that jet fuel prices have surged 15% in the past week due to escalating tensions in the Middle East, particularly after U.S.-Israel strikes on Iran. U.S. airlines, including American Airlines, have largely abandoned the practice of hedging against fuel costs, leaving them exposed to such price spikes. According to regulatory filings, a one-cent increase in the cost of jet fuel per gallon would increase American Airlines' annual fuel expenses by about $50 million.

Analysts note that American Airlines serves more fare-sensitive leisure travelers and operates short-haul routes that consume more fuel due to frequent take-offs and landings, making it particularly vulnerable to fuel cost increases. The broader airline industry is already dealing with operational disruptions from the conflict, with thousands of flights cancelled.