American Airlines, United Airlines and Southwest Airlines are reducing planned flight capacity as a sharp rise in fuel prices puts pressure on airline profitability, executives said Wednesday.
The US airline industry has responded to higher fuel costs since the Iran war began by tightening capacity, relying on resilient passenger demand and raising fares. Executives from all three carriers said demand has remained strong despite higher ticket prices, helping offset some of the increase in jet fuel costs.
However, the latest fuel price surge is prompting the airlines to reassess less-profitable routes for late 2026 and potentially into 2027.
American Airlines said the latest increase in fuel prices alone is expected to add about $1 billion to its fourth-quarter costs. United Airlines said some flights scheduled for December will no longer operate, with additional adjustments possible during the first quarter and into 2027.
Southwest has already reduced its planned 2026 capacity growth by roughly half because of higher fuel prices and could make further cuts if elevated fuel costs persist.
The changes highlight how rising fuel expenses are reshaping airline capacity despite continued demand. Carriers are seeking to protect fares on routes where demand remains strong while removing flights that become less economically viable as operating costs increase.
Shares of all three airlines have declined over the past month amid the rise in fuel prices. American and United are down about 14% and 15%, respectively, while Southwest has fallen roughly 11%.
American expects revenue gains to hold
American Airlines Chief Executive Robert Isom told a Morgan Stanley conference that he remained confident in the company's revenue outlook. The carrier expects third-quarter revenue to increase between 16% and 19% from a year earlier, with Isom saying most of the recent revenue gains should prove sustainable.
Revenue growth has been broad-based across domestic and international markets and both premium and economy cabins, he said.
American Chief Financial Officer Devon May said at the same conference that fourth-quarter fuel prices had risen by roughly $1 per gallon from the level assumed in July.
Each one-cent change in fuel prices affects American's quarterly costs by approximately $10 million, resulting in an estimated $1 billion increase in fourth-quarter fuel expenses at current levels.
May said American would continue adjusting capacity during the latter part of the fourth quarter in response to higher fuel costs.
United reassesses less-profitable routes
United Airlines is taking a similar approach. Chief Financial Officer Michael Leskinen said the airline had decided to cancel some flights planned for December after higher fuel costs made certain marginal routes less attractive.
Further capacity changes could be introduced in the first quarter and into 2027 if fuel prices remain elevated.
Leskinen said United's strategy was focused on profitability and free cash generation rather than maximising market share.
The capacity reductions are taking place without clear evidence of a broad decline in travel demand. Leskinen described United's fourth-quarter bookings as very strong and said there was limited evidence of demand being affected by higher fares.
Premium travel remains strong, corporate demand is improving and economy-class demand is also holding up, he said. United continues to expect that higher fuel expenses can eventually be recovered through pricing, although the recovery may take time.
Southwest could make further cuts
Southwest Airlines Chief Financial Officer Tom Doxey said autumn revenue was performing ahead of expectations, helping offset increased fuel costs and allowing the carrier to maintain its third-quarter earnings guidance.
The airline had initially planned to increase capacity by around 2% to 3% year over year in 2026.
Doxey said that if fuel prices remained higher for an extended period, reducing capacity would be the natural response.
Source: Reuters