By Rajesh Kumar Singh and Shivansh Tiwary
CHICAGO, Sept 16 (Reuters) - American Airlines, United Airlines and Southwest Airlines are scaling back planned flight schedules following a recent surge in fuel prices that threatens their profits, executives said Wednesday.
The U.S. airline industry has been leaning on tighter capacity, resilient demand and higher fares to absorb a runup in fuel costs since the Iran war began.
Executives at all three carriers said on Wednesday that demand remained strong even
after price increases, helping them offset much of the higher cost of jet fuel. But the latest jump in fuel is prompting them to reassess less-profitable routes late this year and, potentially, into 2027.
American said the latest jump in fuel prices alone was adding about $1 billion to its fourth-quarter costs, while United said some flights planned for December would no longer operate and that further adjustments could follow in the first quarter and into 2027.
Southwest said it had already cut its planned 2026 capacity growth roughly in half because of higher fuel prices and could trim further if fuel costs remained elevated.
The fuel shock is continuing to reshape airline capacity, despite resilient demand, and shows how the industry's broader response is to protect pricing where demand allows and remove flights where the economics deteriorate as costs rise.
Shares of all three carriers have fallen over the past month as fuel prices have risen. American and United are down about 14% and 15%, respectively, while Southwest has lost about 11%.
AMERICAN SEES DURABLE REVENUE GAINS
American CEO Robert Isom said at a Morgan Stanley conference that he felt "really good" about the carrier's forecast for third-quarter revenue to rise 16% to 19% from a year earlier and expected the vast majority of the recent revenue gains to prove durable.
Revenue strength was broad-based across domestic and international markets and both premium and coach cabins, he said.
"We've absolutely done a great job of recapturing a tremendous amount of that expense," Isom said of the higher fuel bill.
Speaking at the same conference, American Chief Financial Officer Devon May said fourth-quarter fuel prices had risen roughly $1 a gallon from the level assumed in July. Every 1-cent move in fuel changes American's quarterly costs by about $10 million, producing what May called a roughly $1 billion fourth-quarter runup.
American will continue adjusting capacity late in the fourth quarter in response to the increase, May said.
FUEL SHOCK FORCES CAPACITY RESPONSE
United is taking a similar approach. Its chief financial officer, Michael Leskinen, said some flights that had been planned for December would no longer operate because higher fuel costs had made marginal routes less attractive.
If fuel remains high, United could make further adjustments in the first quarter and into 2027.
"We are not flying to maximize market share. We're flying to maximize profitability and free cash generation," Leskinen told the Morgan Stanley conference.
The capacity response is occurring without clear signs of a broad pullback in travel demand. Leskinen described United's fourth-quarter bookings as "tremendously strong" and said there was very little evidence of demand destruction. Premium travel remained strong, corporate business was improving and economy demand was also holding up.
Leskinen said United still expected to recover the higher fuel expense through pricing, though with a lag.
Southwest Chief Financial Officer Tom Doxey said autumn revenues were running ahead of expectations, helping offset higher fuel costs and allowing the airline to maintain its third-quarter earnings guidance.
Southwest had initially planned year-over-year capacity growth of about 2% to 3% for 2026.
"If fuel is higher for longer," Doxey said, trimming capacity would be the "natural response."
(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Matthew Lewis and David Gaffen)
