What happened?
Shares of global airline American Airlines (NASDAQ: AAL) jumped 6.8% in the morning session after crude oil prices fell following remarks from President Donald Trump that further strikes on Iran were highly unlikely while negotiations continue.
CNBC reported that Brent crude dropped 3% to about $95 per barrel, while West Texas Intermediate fell 3% to $88 per barrel. Fuel represents one of the largest operating expenses for airlines operators, meaning falling energy prices provide immediate relief to operating costs. Easing crude benchmarks can bolster operating margins and lift profitability expectations across the broader travel and leisure sector.
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What is the market telling us
American Airlines’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 17 days ago when the stock dropped 4.7% on the news that the company reported third-quarter results and provided full year earnings per share guidance which fell below Wall Street's expectations as rising fuel costs pressured margins.
According to the company, third-quarter revenue was a record $16.3 billion, up 19.3% and above the high end of its prior range, but fuel expense rose $1.9 billion, or 67.5%, to $4.6 billion. American paid $3.85 a gallon, up from $2.37 a year earlier. Operating income was $115 million. On a GAAP basis the airline lost $269 million, or 41 cents a share. The adjusted loss was 28 cents a share. Unit costs excluding fuel rose 3.0%, which the company said was the best result among the network carriers, and passenger yield rose 18.3% as it pushed fares to cover fuel. That was not enough to offset the fuel bill.
For the fourth quarter, American expects revenue growth of 19.5% to 22.5% but an adjusted loss of 50 cents to $1.10 a share, assuming fuel of about $4.70 a gallon, nearly double the year-ago quarter. It now expects a full-year adjusted loss of $1.00 to $1.60 a share and said 2027 capacity growth will slow.
American Airlines is down 8.9% since the beginning of the year, and at $14.10 per share, it is trading 22.3% below its 52-week high of $18.15 from June 2026. Investors who bought $1,000 worth of American Airlines’s shares 5 years ago would now be looking at only $633.20.
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