American Airlines warns high fuel prices could force capacity adjustments

American Airlines' chief financial officer, Devon May, said fourth-quarter fuel prices had risen roughly $1 a gallon from the level assumed when American issued its guidance in July, adding about $1 billion to the carrier's fuel costs.

May said every 1-cent move in fuel prices changes American's quarterly costs by about $10 million. The airline would continue adjusting capacity late in the fourth quarter because of the increase, he said.

The latest fuel spike has had its biggest impact on the fourth-quarter outlook. May said July and August fuel prices were broadly in line with American's third-quarter assumptions before rising in September.

American's third-quarter revenue, capacity and unit-cost performance otherwise remained in line with expectations, May said, leaving fuel as the main variable in the outlook.

Asked whether the fuel increase could force American to lower its full-year guidance or result in negative free-cash flow, May said the carrier would monitor how fuel prices settle over the next several weeks and provide fourth-quarter guidance when it reports earnings.