Can American Airlines Make Money With Oil Near $100

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With WTI crude sitting near $100 a barrel, American Airlines (AAL) is not making money, and management expects another loss in the fourth quarter. United Airlines absorbed a similar fuel hit in the third quarter but still expects a profit for the fourth. So why is American in the red when United is not?

American Airlines Earns Less Than It Pays In Interest

American Airlines earned $1,036 million in operating income in the twelve months to September 30, 2026. This fell short of its interest expense of $1,663 million over the same months. The airline posted an operating margin of 1.7% for those twelve months, a level higher than at only 10 of the past 40 quarter ends. United produced a 6.4% operating margin over the same twelve months.

So American's operating income does not cover its interest bill, and its shareholders take any higher fuel bill as a loss. United still has profit to absorb one.

With Heavy Debt, American Airlines Took The Fuel Hit

Management said on the October 22, 2026 call that higher fuel added $1.9 billion to American's costs in the third quarter. United said on its October 21 call that fuel raised its expense by $1.8 billion from a year earlier. The bills were close in size, but American has seen its twelve-month operating income fall to less than half of the $2,259 million it earned in the twelve months to September 2025. United's operating income fell to $4.17 billion from $5.17 billion.

American also carries heavy debt relative to the value of its shares. The company reported $28,079 million in net debt, its debt, lease and pension obligations minus cash and short-term investments, at the end of September. This compared with a market value of $8,025 million on October 23. Management expects net debt to climb back to about $30.5 billion by the end of 2026, flat with where the airline closed 2025, even as management says it remains committed to reducing debt and lowering interest expense.

American's shares have also fallen further than United's during weeks when oil jumps. Across the 15 weeks with the biggest rises in oil since October 2023, American's shares changed by a median of -5.3% in the week. United's shares changed by a median of -1.4% in those same weeks.

Customers Are Still Paying American Airlines More

American's revenue rose 12.3% to $60,981 million in the twelve months to September 30, 2026, matching the pace of United's growth. The airline reported an adjusted loss of $0.28 per share in the third quarter, finishing ahead of the midpoint of its own guidance. Management called fuel the biggest factor in the quarter.

So American's problem is not a lack of customers, and the sales growth is real. Yet even with revenue rising, its operating income stayed below its interest expense over those twelve months.

Watch American Airlines' Operating Income Against Its Interest Bill

Management based its fourth-quarter outlook on an average fuel price of about $4.70 per gallon, using the forward curve as of October 19. American's fourth-quarter report will show where its twelve-month operating income stands against its interest expense.

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