🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

US carriers cut margin outlook on fuel costs, Frontier flags lower bookings

Published 09/13/2023, 06:46 AM
Updated 09/13/2023, 10:11 AM
© Reuters. FILE PHOTO: A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau/File Photo
LUV
-
CL
-
SAVE
-
ALK
-

(Reuters) - Three U.S. carriers on Wednesday cut their third-quarter margin forecasts on higher fuel costs, sending shares of other airlines in the country lower over concerns related to rising expenses.

U.S. airlines have warned of headwinds related to surging fuel costs in the current quarter, as oil prices have risen due to extended production cuts by Saudi Arabia and Russia.

The supply cuts could lift Brent futures above the $100 a barrel threshold before the end of the year, Bank of America analysts said.

Shares of low-cost carrier Frontier were down 9% after it warned of a "recent significant unexpected change in the booking trajectory," adding it experienced a greater volume of "recent operational cancellations" than previously forecast.

"In recent weeks, sales have been trending below historical seasonality patterns," Frontier said in a regulatory filing.

The forecast comes against the backdrop of early signs of domestic travel demand weakening, with inflationary pressures hurting consumers and airlines handing out costly contracts to retain workers.

American Airlines (NASDAQ:AAL) said it expects a profit of 20 to 30 cents per share in the current quarter, down from its prior forecast of 85 to 95 cents per share, sending its shares down 4%.

The airline also tightened its forecast for total revenue per available seat mile, a proxy for pricing power. It is now expected to fall 5.5% to 6.5%, compared with its earlier forecast of a 4.5% to 6.5% fall. Its shares fell 1.71%.

© Reuters. FILE PHOTO: A logo of low cost carrier Spirit Airlines is pictured on an Airbus plane in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau/File Photo

"Unsurprisingly fuel guidance revisions are placing pressure on implied EPS guides while revenue updates are more mixed, reiterating softness in the domestic market," Raymond James analyst Savanthi Syth said.

Stocks of larger U.S. carriers such as Delta Air Lines (NYSE:DAL), Southwest Airlines (NYSE:LUV) and United Airlines also fell about 2% each.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.