Rothschild & Co Redburn warned that American Airlines was the most exposed airline carrier to rising fuel costs as the U.S.-Iran conflict continues. The bank downgraded the airline carrier to neutral from buy. Analyst James Goodall also lowered his price target to $12.5 per share from $17, which implies a fractional gain from Wednesday’s close. Goodall wrote that the underlying backdrop for U.S. airlines was positive heading into 2026, with demand trends looking like they were improving. However, the recent Middle East conflict has introduced an obstacle for airline carriers, as it could drive jet fuel prices higher — thus hurting the sector’s earnings outlook. AAL 1Y mountain AAL 1Y chart “Domestic capacity growth is now accelerating through this year, and the Iran conflict will add disruptive pressures and material fuel cost inflation. Indeed, higher fuel prices result in a material cut to our forecasts and an expectation of substantial downgrades to consensus this year,” he wrote. The analyst added that American Airlines has the greatest sensitivity to fuel prices, with every 10-cent move per gallon equating to almost 25% in its earnings per share. “This along with pressures facing its network this year — overcapacity in Chicago and some Middle East exposure — means we see the most downside risk to estimates,” the analyst said. Goodall now forecasts negative earnings this year for American Airlines. “Our forecasts incorporate some easing of jet fuel into next year; we do however see a strong rebound in profitability and cash generation next year but still have forecasts below consensus,” he added. Shares of American Airlines have shed 19% this year and are down 12% over the past 12 months.
