American Airlines Downgrades Follow 6% Share Drop on $110 Oil Spike
American Airlines shares slid as much as 6% Monday after West Texas Intermediate crude topped $110 per barrel, pushing jet fuel costs up by $1.75 per gallon and adding roughly $1.5 billion in quarterly expenses. Rothschild & Co downgraded the stock to Neutral, cutting its price target from $17 to $12.50.
1. Fuel cost surge raises expenses
West Texas Intermediate crude surpassed $110 per barrel on Monday, driving jet fuel prices up by $1.75 per gallon. This increase adds approximately $1.5 billion in quarterly fuel expenses for American Airlines, squeezing profit margins.
2. Stock slides 6% on oil spike
American Airlines shares declined as much as 6% in early trading as investors factored in the higher fuel bill and potential for ticket price hikes to offset costs. The selloff reflects mounting concerns over the company’s ability to pass on expenses amid softening demand.
3. Rothschild & Co cuts rating
Rothschild & Co downgraded American Airlines from Buy to Neutral and reduced its price target from $17 to $12.50. The analyst cited limited financial flexibility and the risk of downward revisions to earnings forecasts under sustained elevated fuel prices.