BENGALURU: American Airlines Group Inc on Wednesday forecast first-quarter profit below market expectations, joining bigger rival United Airlines to signal a hit from persistently high labor and fuel costs.

The dull outlook pushed its shares more than 8% lower and weighed on other major US airlines. Delta Air Lines, which will kick off the earnings season on Thursday, fell 2.91%.

Higher fares amid rising global travel have so far helped the airlines industry mitigate rising costs, but concerns over the sustainability of consumer demand have gained ground against the backdrop of high borrowing costs, inflation and job losses.

American had in January said that its fuel price has increased by nearly 70%. The airlines industry has been able to survive the broader economic slowdown in the United States, thanks also to constrained airline capacity due to shortages of aircraft and spare parts.

Indicating robust demand, American said it expects total revenue per available seat mile, a proxy for pricing power, to be up about 25.5% in the first quarter from a year earlier.

However, on an adjusted basis, it forecast quarterly profit per share between 1 and 5 cents compared to analysts’ expectation of 6 cents, according to Refinitiv data.

“American’s 1Q23 updated guide came in mostly at the mid-points of its initial guide provided in January, although we had expected American to come in towards the better end in a similar manner as JetBlue’s guidance update provided in mid-March,” said Raymond James analyst Savanthi Syth.

The lower forecast came despite the carrier slightly lowering the jet fuel price guidance to $3.27 to $3.32 per gallon for the first quarter from its prior outlook of $3.33 to $3.38 per gallon.