American Airlines Stock Plunges as Fuel Costs Surge. How to Play AAL Now.

American Airlines Group (AAL) shares tumbled after the carrier warned that surging jet fuel prices are eroding profitability, overshadowing an otherwise stronger-than-expected second-quarter earnings report. While the airline delivered record quarterly revenue and topped Wall Street’s earnings estimates, investors focused on sharply higher fuel expenses and a weaker full-year outlook, raising fresh concerns about margin pressure and the stock’s near-term trajectory.

Fuel costs have emerged as the key challenge. American said second-quarter fuel expense jumped by more than $2.2 billion, or 83% year-over-year (YOY), although higher ticket prices offset nearly half of that increase. Management expects fuel costs to remain elevated in the third quarter and now forecasts full-year adjusted earnings ranging from a loss of $0.65 per share to a profit of $0.65, a significant reduction from its previous outlook.