American Airlines and Spirit have lowered their summer profit forecast due to cost concerns

An American Airlines aircraft takes off above Spirit Airlines planes and other aircraft at Los Angeles International Airport (LAX) on June 1, 2023 in Los Angeles, California.

Mario Tama | Getty Images

American Airlines And Spirit Airlines On Wednesday, other airlines warned that higher costs will hit profits in the busy summer quarter.

American said it expected third-quarter adjusted earnings per share to be between 20 and 30 cents, down from an earlier forecast of up to 95 cents per share, citing more expensive fuel and a new pilot contract. The airline halved its operating margin to 4% to 5% from a forecast earlier this summer.

Spirit Airlines expects negative margins of up to 15.5% in the three months ended September 30, down to -7.5% from a previous estimate of -5.5%. The budget airline also lowered its revenue forecast for third quarter.

Airlines have lost the pricing power they enjoyed last summer when capacity was more constrained by the Covid pandemic, even though demand was strong.

Now they face traditionally slower travel demand. Frontier Airlines warned on Wednesday that “sales in recent weeks have been below historical seasonality patterns” and forecast an adjusted loss for the quarter.

Shares of American, Spirit and Frontier fell on Wednesday. Frontier shares hit a new 52-week low.

Fare tracking firm Hopper said Tuesday it expects fares to fall further during the fall off-peak season. Domestic US tickets cost an average of $211 in September and October, 30% less than in peak summer.

Southwest Airlines And Alaska Airlines cut their third quarter forecasts earlier this month.

Airlines will begin reporting third-quarter results in mid-October. American Airlines and Spirit have lowered their summer profit forecast due to cost concerns

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