American Airlines, Spirit Airlines cut summer profit forecast on higher costs


Mario Tama

Mario Tama | Getty Images

American Airlines and Spirit Airlines on Wednesday joined other carriers in warning that higher costs will hit profits during the bustling summer quarter.

American said it expects adjusted earnings per share to come in between 20 cents and 30 cents in the third quarter, down from a previous forecast of as much as 95 cents a share, citing more expensive fuel and a new pilot labor deal. Spirit Airlines is expecting negative margins as high as 15.5% for the three-month period ending September 30, compared to an earlier estimate that was -5.5% to 7.5%. The budget airline also cut its revenue forecast for the third quarter.

Airlines have lost the pricing power they commanded last summer when capacity was more constrained coming out of the pandemic, even though demand has been strong.

Now they face what is traditionally a slower travel demand period.

Frontier Airlines warned on Wednesday that “in recent weeks, sales have been trending below historical seasonality patterns,” and forecast an adjusted loss for the quarter.Shares of American, Spirit and Frontier fell Wednesday. Frontier’s stock hit a new 52-week low.

Fare-tracking company Hopper on Tuesday said it expects fares to continue dropping in the fall shoulder season, with domestic U.S. tickets averaging $211 in September and October, down 30% from the peak of summer.

Southwest Airlines

and Alaska Airlines cut their third-quarter forecasts earlier this month.Airlines start reporting third-quarter results in mid-October.