American Airlines CEO warns that higher fares are coming
DALLAS (AP) — Rising fuel costs are eating into airline profits, dampening expectations for the rest of 2018, and setting the stage for higher fares.
Fuel is the airlines' second-biggest expense after labor, so when it rises — at American it was up 40 cents a gallon from a year ago — so does the cost of providing air travel, says American Airlines CEO Doug Parker.
"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 on a call with analysts and reporters.
American blamed higher fuel prices for a 45 percent drop in first-quarter profit, to $186 million.
The world's biggest airline cut its forecast of earnings for the year, and shares fell $2.