High fuel costs have eroded profitability. American Airlines Group Inc.'s Q2 performance exceeded expectations but once again cut its full-year profit forecast.

Due to the ongoing high fuel prices caused by the Middle East conflict, American Airlines Group Inc. (AAL.US) has lowered its profit guidance for the second time this year for 2026, further hindering its efforts to close the performance gap with its two major competitors. As of the time of writing, American Airlines Group Inc. is down more than 4% in pre-market trading on Thursday. According to the financial report, American Airlines Group Inc. achieved a revenue of $16.74 billion in the second quarter, a 16.3% year-on-year increase, which is in line with analysts' expectations. The adjusted net profit was $99 million, with an adjusted earnings per share of 15 cents, significantly lower than the 95 cents in the same period last year but higher than analysts' expectations of 2.7 cents. The company's fuel costs in the second quarter increased by over $2.2 billion, an 83% year-on-year increase. American Airlines Group Inc. has been trying to regain growth momentum by strengthening its high-end aviation services and loyalty business. These two areas have a stronger ability to withstand price fluctuations compared to basic economy ticket prices. The company stated that in the second quarter, it was able to offset nearly 50% of the increase in fuel costs by raising ticket prices. Due to the rise in fuel costs, American Airlines Group Inc. expects fuel expenses to increase by $1.7 billion year-on-year in the third quarter. On top of the additional $2.2 billion in fuel costs incurred so far this year, the cost pressure is further intensifying. The company expects an adjusted loss of 10 to 70 cents per share in the third quarter, while analysts were expecting earnings of 28 cents per share. American Airlines Group Inc. also stated that the full-year adjusted loss for 2026 could be as high as 65 cents per share, lower than its April forecast of a loss of 41 cents per share; in the best-case scenario, the company expects to achieve earnings of 65 cents per share for the full year, above analysts' previous expectation of 61 cents per share. In its first quarter financial report, the company had projected, adjusted earnings per share for the full year to be between -0.40 and 1.10 dollars. This more pessimistic performance outlook has put more pressure on CEO Robert Isom. American Airlines Group Inc. stock has been weak so far this year, and Isom has also faced a potential merger proposal from United Airlines (UAL.US), which he had previously rejected. At the time of the announcement of American Airlines Group Inc.'s performance, its main competitors were showing some resilience and benefiting from strong demand for high-priced airfares. This month, Delta Air Lines, Inc. (DAL.US) reiterated its full-year profit guidance, and United Airlines also released a more optimistic performance outlook.