Fuel Spike Splits the US Majors

A jet fuel shock has pushed America's largest carriers into visibly different bets, and the gap between them widened this week at the Morgan Stanley Laguna investor conference.

American Airlines said Wednesday it would trim capacity in late fourth quarter and slow growth into 2027, absorbing roughly $1 billion in additional fourth-quarter costs. Chief financial officer Devon May said fuel is running about a dollar a gallon above the airline's July assumptions — a punishing number at a carrier where each additional cent per gallon adds some $10 million to quarterly costs.

United took the opposite line. CFO Michael Leskinen said the airline still expects to recover 100 percent of its fuel costs by year-end, conceding only a repricing lag because roughly 35 percent of fourth-quarter tickets are already sold. United is pulling selected December flights and has flagged possible cuts in the first quarter and beyond, but its strategy is pricing power rather than retreat: an order for more than 250 aircraft weighted towards lie-flat business seats, new A321XLR routes into Europe, and Starlink on 1,000 aircraft by December.

"We are not flying to maximize market share," Leskinen said. "We're flying to maximize profitability and free cash generation."

Southwest has already moved. The carrier halved planned 2026 capacity growth to roughly 1 to 1.5 percent, down from 2 to 3 percent. CFO Tom Doxey called the trimming a "natural response" to sustained high fuel.

None of this is a demand story. American chief executive Robert Isom reported third-quarter revenue up 16 to 19 percent year on year. Seats are full and premium cabins are selling. The pressure is entirely on the cost side.

Which leaves the winter's live question: whether United is right that passengers will simply pay more, or whether American and Southwest are right that the only dependable lever is flying less.