U.S. airlines rally as they see path to profit despite fuel jump

U.S. airline stocks climbed as the carriers said they will trim flying to remain on track toward profits even as fuel prices soar.

U.S. airline stocks climbed as the carriers said they will trim flying to remain on track toward profits even as fuel prices soar.

Several of the largest carriers, including United Airlines Holdings Inc. and American Airlines Group Inc., cut their capacity forecasts for the first quarter, while Delta Air Lines Inc. held growth to the low end of a previous range, according to regulatory filings ahead of an investor conference Tuesday. Many simultaneously boosted their revenue expectations, citing surging travel demand in the wake of waning coronavirus infections.

The moves may help ease investor concerns over the impact of higher fuel costs as the industry looks to recover from a pandemic slump. The jump in oil prices -- particularly after Russia’s attack on Ukraine -- is pressuring margins for an industry that’s still struggling for profits, forcing airlines to tighten the supply of available seats in response.

Fuel prices, one of the largest costs for carriers, had increased 37 per cent this year through Monday. Airlines now are projecting jet fuel to cost US$2.80 to US$3 a gallon this quarter, up from previous estimates around US$2.50 a gallon.

“We’re prepared for higher fuel and confident in our ability to recapture it,” Daniel Janki, Delta’s chief financial officer, said at a JPMorgan Chase investor conference.