American Airlines (NASDAQ:AAL) has become the second US airline to lower third-quarter guidance on Wednesday.
AAL has lowered its adjusted earnings per share guidance for Q3 following Spirit Airlines' announcement that it is lowering third-quarter revenue guidance.
Both companies pointed to increased fuel prices for the guidance changes, while AAL added that its labor deal with pilots has also had an impact. AAL stated: "Fuel prices have increased considerably since the company's initial third-quarter guidance" issued in July."
"The company now expects to pay an average of between $2.90 and $3.00 per gallon of jet fuel in the third quarter."
That fuel price is an increase on the previous guidance of $2.55 to $2.65 per gallon. As a result, adjusted earnings per share is now seen between $0.20 and $0.30, a climb down from the previously forecast $0.85 to $0.95.
Furthermore, American Airlines said the sweetened labor deal with pilots has resulted in retroactive pay expense of approximately $230 million, which will be recognized in the third quarter.
"This retroactive pay expense is expected to impact the third-quarter adjusted operating margin by approximately 1.7 points and adjusted earnings per diluted share by $0.23," AAL added.
Third-quarter adjusted operating margin is now expected to be approximately 4% to 5%, down from 8% to 10%.
AAL shares are down almost 4% in premarket trading.