American reports Q3 results Thursday after guiding to a loss. Fuel is part of the story, but debt and a thin margin are perhaps bigger threats.
The second quarter of 2026 set the stage. Revenue hit a record $16.7bn, up 16.3%, and American still earned just $71MM (GAAP)/$99MM adjusted. Fuel expense rose more than $2.2 billion, or 83%, and higher fares offset nearly half of it. Matthew covered the numbers in his Q2 post, and I argued in July that American is growing itself into a hole.
American’s adjusted operating income in Q2 was $453MM on $16.7bn of revenue, a margin of about 2.7%. The quarters are not identical, so the comparison is not perfect, but the gap is wide enough that fuel cannot be the whole explanation – as it never is. Investors mostly agree. American’s shares closed near $11.87 on Friday, October 16, down from the mid-$13 range in late September, and analysts have cut targets from BMO ($19 to $15.50), Bank of America ($17 to $15), and Goldman Sachs ($13 to $11, with a sell rating). Morgan Stanley now forecasts deeper losses for American and JetBlue, noting that jet fuel is running at roughly double what had been expected.
A great solo travel tip spotted this week on Live and Let's Fly.
