Airlines Trim Capacity as Jet Fuel Prices Spike: LUV, AAL, UAL

The big U.S. carriers are pulling back on flying as jet fuel prices squeeze margins. American Airlines, United Airlines and Southwest Airlines are scaling back planned flight schedules following a recent surge in fuel prices that threatens their profits, executives said Wednesday.

Demand is not the issue. The math on marginal routes is.

What the airlines said

The U.S. airline industry has been leaning on tighter capacity, resilient demand and higher fares to absorb a runup in fuel costs since the Iran war began. Executives at all three carriers said demand remained strong even after price increases, helping them offset much of the higher cost of jet fuel. But the latest jump in fuel is prompting them to reassess less-profitable routes late this year and, potentially, into 2027.

American said the latest jump in fuel prices alone was adding about $1 billion to its fourth-quarter costs, while United said some flights planned for December would no longer operate and that further adjustments could follow in the first quarter and into 2027.

Southwest halves its 2026 growth plan

Southwest Airlines initially planned capacity growth of about 2 percent to 3 percent for 2026, but higher fuel costs have prompted it to cut that target by roughly half.

Southwest CFO Tom Doxey said autumn revenues were running ahead of expectations, helping offset higher fuel costs and allowing the airline to maintain its third-quarter earnings guidance. Southwest confirmed in its second-quarter 2026 earnings report that average jet fuel costs surged to $3.92 per gallon from $2.32 per gallon a year earlier.

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United and American follow the same playbook

“We are not flying to maximize market share. We’re flying to maximize profitability and free cash generation,” United Airlines CFO Michael Leskinen said at the Morgan Stanley conference.

American CFO Devon May said at the same Morgan Stanley conference that fourth-quarter fuel prices had risen roughly $1 a gallon from the level assumed in July, and are expected to add $1 billion to its fourth-quarter costs. American CEO Robert Isom said the airline still expects third-quarter revenue to rise 16% to 19% from a year earlier, citing strength across domestic and international markets as well as both premium and economy cabins.

Stock reaction so far

Over the month preceding the conference, American shares fell about 14 percent, United about 15 percent, and Southwest about 11 percent as fuel prices rose, Reuters reported, suggesting investors remained cautious about how far stronger revenue could protect profits against another increase in operating costs.

Traders can track additional airline and energy headlines in our news feed.

Options market and stocks to watch

Watch for continued volatility across the airline complex as carriers digest higher fuel input costs and adjust Q4 and 2026 route maps.

• LUV: Watch for reaction to the halved 2026 capacity growth target and any further guidance updates from Southwest.
• AAL: Watch for how the added $1B in Q4 fuel costs interacts with the 16-19% Q3 revenue growth outlook at American.
• UAL: Watch for confirmation on December flight cancellations and any Q1 2027 capacity commentary from United.
• DAL: Watch Delta as a read-across, given prior commentary that tighter capacity could sustain fares even if oil declines.
• JBLU: Watch JetBlue as smaller carriers face similar fuel pressure with less pricing power on marginal routes.

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