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 in premarket trading on concerns over rising expenses.
American Airlines (AAL.O), Spirit Airlines (SAVE.N) and Frontier Group Holdings (ULCC.O) followed peers in flagging a hit from jet fuel prices, which have risen since July.
Low-cost carrier Frontier also 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 company's shares fell 4.5% in premarket trading.
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 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 3%.
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.
Spirit Airlines now expects its adjusted operating margins to fall between 14.5% and 15.5%, larger than earlier estimates of a fall of 5.5% to 7.5%, as the company offered discounts to woo travelers.
Florida based-Spirit forecast third-quarter revenue between $1.24 billion and $1.25 billion, against its previous estimate of $1.3 billion to $1.32 billion. Its shares fell 4.6%.
Stocks of larger U.S. carriers such as Delta Air Lines (DAL.N), Southwest Airlines (LUV.N) and United Airlines (UAL.O) also fell about 2% each.
