US Big 3 airlines: Capacity growth despite fuel price volatility

Revenue momentum for the three large global network airlines should continue into 2Q2018, with international entities leading the charge. American, Delta and United all believe their trans-Atlantic entities should be revenue leaders in the quarter, which is the start of the US summer high season.

But accompanying the solid unit revenue growth forecasts is a certain level of volatility in fuel prices, which increased significantly for all of those airlines during 1Q2018. American Airlines expects a 30% increase in its fuel expense for the year.

Despite the run up in fuel prices, American, Delta and United are keeping their 2018 capacity forecasts intact, for now. American believes it is not prudent to trim its forecast just before the summer high season, but is not ruling out adjustments later in the year if fuel prices remain at current levels.