Fuel Surge Costs American Airlines $1 Billion, Forces US Capacity Cuts; airBaltic Files Chapter 11 Over Financing Dispute
Why It MattersA jet fuel price surge to $181.46 a barrel is squeezing US carrier margins and pushing capacity cuts, while airBaltic's bankruptcy filing signals financing stress in leveraged European airline restructurings.
Global average jet fuel prices reached $181.46 a barrel, up 6.1 percent on the week, triggering capacity reductions across US carriers. American Airlines told investors fuel is running roughly $1 a gallon above its July assumptions, adding about $1 billion to fourth-quarter costs; chief financial officer Devon May said each one-cent move in the gallon price shifts the quarterly cost base by about $10 million. The carrier said it would trim capacity late in the quarter, starting with its least profitable flying, without naming specific routes. United Airlines CFO Michael Leskinen said the airline is cutting some December service from weaker markets and will prioritise profitability over market share.
Bureau of Transportation Statistics data released on 15 September showed the 22 US scheduled passenger carriers earned a combined $16 million after tax in the second quarter, compared with $4 billion in the same period of 2025; the first quarter had already produced a $1 billion aggregate loss.
Separately, Latvia's flag carrier airBaltic filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York on 14 September, one day before a rescheduled bondholder meeting was due to vote on a €257 million super-senior bridge loan carrying 25 percent annual interest. That proposal had drawn criticism for its cost and for the priority it would have taken over €380 million of bonds due in 2029. Instead, airBaltic secured commitments for a €350 million debtor-in-possession facility from Strategic Value Partners, Barclays, Hayfin Capital Management, Morgan Stanley and Oaktree Capital.
airBaltic operates 54 in-service Airbus A220-300s with two more in storage, owning only 15 of these outright, with DAE and German Operating Aircraft Leasing each having seven aircraft placed with the carrier and Azorra six. The airline told the court it intends to cancel or defer deliveries of some 40 further Airbus aircraft, though these remain stated intentions rather than confirmed cancellations. Avation, which has four A220s on lease with the carrier, said it expects its leases to be honoured. The Latvian state remains the controlling shareholder, with Lufthansa Group holding a minority stake.
