| American Airlines revealed it is adjusting its outlook for the second quarter, raising its operating margin expectations from 11% to 13% to a range of 12.5% to 14.5%. The airline attributes the change to increasing passenger demand and decreasing fuel costs. American previously had forecasted an average fuel price between $2.65 and $2.75 per gallon and is revising it to $2.55 to $2.65 per gallon. In Q1, the airline reported an operating margin of 3.6%, up from -19.4% in Q1 2022. American Airlines' fuel expenses added up to $3.16B in Q1, increasing from $2.5B for the same period in 2022. Despite demand and lower fuel costs, the operating expenses may be reduced domestically as the airline cuts its flight schedule due to staff shortages impacting the industry. 
Airlines have been expanding connections between the U.S. and international markets in anticipation of demand, including American Airlines extending its flights from Philadelphia to Lisbon, Charlotte to Madrid, and Dallas to Dublin into year-round routes, with the latter two previously scheduled to end in October. American's schedule for October is set to increase to 1,615 from 1,561, constituting 11,524 more seats, while its November flights would increase capacity by 511 flights and 133,939 seats to a total of 1,405 flights. Similarly, United Airlines is restarting its flights between Los Angeles and Auckland and adding new routes, including San Francisco to Christchurch and LAX to Brisbane, in Q4. United is also adding flights from Chicago O'Hare to Shannon, Ireland, a route that had been on pause for six years. 
Between May 26 and 29, 9.8 million passengers passed through Transport Security Administration checkpoints across the country, constituting an increase of 300,000 versus the same period in 2022. However, despite the growing demand, there has been a reduction in routes and frequency within North America. American Airlines cut 50,000 flights, mostly impacting June and July schedules for airports such as O'Hare, Dallas-Ft. Worth, Charlotte, Philadelphia, and Phoenix. United is also reducing flights between Newark Liberty and Toronto Pearson, among other flights to southeastern Canada. "The operation is getting more challenged as we start to move into the peaker parts of the schedule," said United CEO Scott Kirby in March, who also added that the airline needed 10% more pilots and 5% more aircraft compared to 2019. Adding to ongoing pilot and staff shortages in the U.S., the FAA is also experiencing a shortage of air traffic controllers. In March, New York City airports were at only 54% of the required air traffic employee count, while nationally, staffing was at 84%. After its Q4 results, JetBlue CEO Robin Hayes said, "We don't want to pull down flights. I'm sure no airline wants to pull down flights," as it announced a reduction in its New York City schedule amid the FAA's plan to request airlines of a 10% reduction in flights to improve congestion at New York City and Washington D.C. airports due to its staff shortages. |
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