American Airlines Downgraded to Neutral as Jet Fuel Costs Surge Over 20%
American Airlines shares slumped 5.4% after Rothschild Redburn downgraded the stock to Neutral and cut its price target, citing jet fuel costs that surged over 20% due to Middle East conflict. Analysts warn that AA’s lack of fuel hedging, heavy debt and higher capacity could further squeeze profits.
1. Analyst Downgrade and Share Reaction
Rothschild Redburn lowered American Airlines’ rating from Buy to Neutral and trimmed its price target. The stock fell 5.4% in a single session, marking its 26th move greater than 5% over the last year.
2. Surge in Jet Fuel Prices
Jet fuel prices have jumped more than 20% following escalating Middle East tensions, significantly raising operating costs for airlines. The surge in oil prices poses a major expense challenge, particularly for carriers with limited cost hedging.
3. Financial Exposures and Profit Pressure
American Airlines lacks comprehensive fuel hedges, carries a substantial debt load, and has increased domestic capacity, all of which heighten its vulnerability to rising fuel costs. The carrier’s suspension of Dubai flights and an 87% profit decline in 2025 further underscore potential headwinds to its financial recovery.