American Airlines (NASDAQ: AAL) once again reduced its full-year 2026 earnings forecast on Thursday, primarily due to rising fuel costs. As the largest U.S. airline by network size, the carrier has been unable to fully offset the cost pressures from this year's fuel price increases, despite raising ticket prices.

In Thursday's early trading session, American Airlines shares fell approximately 8%. Company management has been working to demonstrate to investors that the airline can close a multi-billion dollar profitability gap with its competitors.

The updated full-year guidance

American Airlines issued its latest full-year outlook, forecasting an adjusted loss of up to $0.65 per share to a profit of $0.65 per share. This projection is weaker than the April range of a loss of $0.40 to a profit of $1.10 per share, and significantly below the initial guidance at the start of the year for earnings of $1.70 to $2.70 per share, which had already been revised downward once.

During the earnings conference call, executives defended the decision to continue expanding capacity, with flight capacity set to increase by up to 5% in the current quarter.

Industry-wide uncertainty from fuel price volatility

The earnings season for U.S. airlines began in July, and within just a few weeks, volatile fuel prices have cast uncertainty over the full-year operating outlook for major carriers. Airlines have widely stated that strong travel demand and rising ticket prices can offset some of the impact of higher oil prices. Fuel is the second-largest expense in an airline's cost structure, following labor costs.

The company disclosed an adjusted loss of $0.70 to $0.10 per share for the current quarter, falling short of Wall Street's consensus estimate for earnings of $0.28 per share. However, its revenue growth forecast was raised to 16%-19%, surpassing the analyst estimate of 16.6%.

CEO comments and future strategy

In an interview last month, American Airlines CEO Robert Isom stated that the company's long-term goal is to close the widening profit margin gap with industry leaders Delta Air Lines and United Airlines, though he did not provide a timeline for achieving this. Isom revealed that American Airlines plans to order new widebody aircraft this year while also adding more high-revenue premium cabin seats to its older aircraft.

In an internal email to employees on Thursday, Isom wrote, "There are still many challenges ahead, but the progress we are making is real."

Second-quarter results

For the second quarter ended June 30, American Airlines reported a net profit of $71 million, or $0.11 per share, down 88% from $599 million, or $0.91 per share, in the same period last year. Quarterly revenue rose 16.3% to $16.74 billion. The company's key pricing metric—passenger revenue per available seat mile—increased by 10% year-over-year.

Excluding one-time items, American Airlines reported an adjusted profit of $0.15 per share for the quarter, beating the Wall Street consensus estimate of $0.03 per share. Total revenue of $16.74 billion also exceeded the expected $16.71 billion.