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Higher Fares Coming to American Airlines, Says CEO

April 26, 2018
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2 min read
HKIA Features
Higher Fares Coming to American Airlines, Says CEO
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American Airlines CEO Doug Parker announced Thursday morning that rising fuel costs are gouging the carrier's profits, and will drive up airfares.

"If indeed this is where fuel prices are going to stay, I would expect you would see higher fares to consumers over time," Parker said Thursday during a Q1 2018 earnings call. Jet fuel is the airline's second-biggest expense after labor, so when costs go up, so do ticket prices; for American Airlines, costs had risen 40 cents a gallon from a year ago, leading to adjusted earning expectations for 2018 after a 45%, or $186 million, drop in first-quarter profit.

Shares fell $2.69, or 6%, to $42.56 in trading shortly after the opening bell on Wall Street following Parker's announcement. While American – the world's largest airline – has heavily invested in replacing older gas-guzzling aircraft in favor of new, more efficient planes, fuel expenses have jumped 26%. Over the first quarter of 2018, American Airlines burned just more than 1 billion gallons at an average cost of $2.10 per gallon, up from $1.70 a year earlier, and Parker estimated that the carrier could have saved $412 million if per-gallon fuel costs were still fixed at early 2017 prices.

Not all numbers were on the decline for American Airlines: Passenger revenue per mile has risen by 3% compared to Q1 2017, while revenue rose by almost 6%, to $10.4 billion. Still, American cut its 2018 profit forecast to between $5 and $6 per share – a $0.50 drop from its January 2018 predictions.

Featured image by Getty Images

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  • Packed with credits foodies will enjoy
  • Solid welcome bonus

Cons

  • Not as useful for those living outside the U.S.
  • Some may have trouble using Uber and other dining credits
  • You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
  • Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
  • Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
  • Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
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  • $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
  • $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
  • $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
  • $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
  • Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
  • No Foreign Transaction Fees.
  • Annual Fee is $325.
  • Terms Apply.