Rising fuel bills deepen profitability pressure on US airlines

US airlines faced growing pressure on profitability as jet fuel costs surged despite strong passenger demand and record revenues. Jet fuel costs rose 104 percent year on year in September, while the industry’s total fuel bill reached $6.17 billion in August.

High volatility in global energy markets, geopolitical tensions and capacity constraints in jet fuel production are making it harder for supply to meet demand. This situation is lowering US airlines’ profitability expectations despite strong passenger demand and rising revenues.

The third-quarter results of Delta Air Lines, United Airlines, American Airlines, Southwest Airlines and Alaska Air Group revealed the impact of rising fuel expenses on their balance sheets. Jet fuel remains airlines’ largest expense after labor costs.

Delta’s fuel costs rose to $4.1 billion

Delta Air Lines posted adjusted revenue of $17.6 billion in the third quarter, supported by strong demand and ticket revenue. The company’s fuel expenses rose 62 percent from the same period last year to $4.1 billion.

Delta’s average fuel cost per gallon increased 60 percent to $3.61. Delta Chief Executive Ed Bastian said the company expects to absorb approximately $6 billion in additional fuel costs over the full year and finish the year with about $4.5 billion in pre-tax profit. The company posted $6.2 billion in pre-tax profit in 2025.

United’s revenue rose as profit expectations declined

United Airlines’ third-quarter revenue rose 17 percent year on year to $17.9 billion. Despite double-digit growth in premium cabin and corporate travel sales, the company’s fuel bill increased by $1.8 billion, or 62 percent.

United Airlines paid an average of $3.90 per gallon for fuel. The company expects adjusted earnings of between 50 cents and $1.50 per share in the fourth quarter, a range below analysts’ expectations. Even if the upper end of the forecast is reached, the company’s full-year 2026 earnings per share were assessed as unlikely to exceed $7.22. United Airlines had forecast earnings of $9 to $11 per share for the full year in July.

Alaska Air Group reported a loss

Alaska Air Group, which includes Alaska Airlines, Hawaiian Airlines and Horizon Air, reported a loss in the third quarter despite higher revenue supported by increased passenger demand. The company’s aircraft fuel expenses rose 60 percent year on year to $1.2 billion.

Alaska Air Group reported a loss of $1.32 per share in the third quarter. Its average fuel cost per gallon was $3.94, and the figure is expected to rise to between $4.65 and $4.85 in the fourth quarter.

Aircraft waiting for departure at Atlanta airport (archive)

The company said it faced $1.8 billion in additional fuel costs over the full year. Adjusted loss per share is expected to be between $2 and $2.50 in the fourth quarter and between $5 and $5.50 for the full year.

Southwest and American Airlines also cut forecasts

Southwest Airlines’ third-quarter operating revenue rose 21 percent year on year to $8.4 billion, reaching the highest quarterly level in the company’s history. Despite this, the company paid $821 million more for fuel than in the same period last year.

Southwest Airlines’ fuel cost per gallon rose to $3.92. The company reported adjusted net profit of $328 million in the third quarter and expects fuel costs per gallon to reach $4.55 in the fourth quarter. Its earnings forecast of between $2.60 and $2.85 per share for 2026 was below the forecast issued in the previous quarter.

American Airlines’ third-quarter revenue rose 19.3 percent to $16.34 billion. The company’s fuel expenses increased 67.5 percent to $4.64 billion.

American Airlines reported a net loss of $269 million and a loss of 41 cents per share in the third quarter. The company expects revenue to rise between 19.5 percent and 22.5 percent in the fourth quarter, while its loss per share is expected to range from 50 cents to $1.10.

The company forecast a loss of between $1 and $1.60 per share for 2026. Growth in its flight network is expected to slow in 2027 compared with this year because fuel prices are expected to remain high.

Jet fuel costs rose 104 percent in one year

According to Consumer Price Index data from the US Department of Labor, jet fuel costs rose 104 percent in September compared with the same month last year. During the same period, airfares also rose 22.4 percent year on year.

According to data from the US Department of Transportation, airlines’ total energy bill rose from $3.85 billion to $6.17 billion in August over one year. The average fuel cost per gallon also increased from $2.30 to $3.72.

Source: Anadolu Ajansı

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