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American Airlines says fuel costs to squeeze margins in Q2

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American Airlines Group raised its estimate for jet fuel costs and cut its margin forecast for the current quarter, reflecting the more than 10 per cent rise in US crude oil prices since the start of the year.

[LONDON] American Airlines Group raised its estimate for jet fuel costs and cut its margin forecast for the current quarter, reflecting the more than 10 per cent rise in US crude oil prices since the start of the year.

The company said it would pay US$1.94-US$1.99 per gallon of jet fuel in the second quarter ending June 30, up from it previous estimate of US$1.84-US$1.89.

The airline said it now expected a quarterly pretax margin, excluding special items, of 17-19 per cent, down from the 18-20 per cent it had forecast earlier.

The company's shares fell 0.4 per cent to US$48.85 in premarket trading on Monday.

American, based in Fort Worth, Texas, reiterated that it expected passenger revenue per available seat mile, a measure of a plane's carrying capacity, to fall by 4-6 per cent this quarter due to weakness on Pacific and Latin American routes.

The airline said in April it would cut capacity by 0.6 per cent in 2016 after an expected increase of about 2 per cent in 2015.

The company also said on Monday that its total revenue passenger miles fell 0.3 per cent in April from a year earlier to 18.1 billion.

Up to Friday's close of US$49.04 on the Nasdaq, the company's stock had fallen about 9 per cent this year.

REUTERS