Can American Airlines Stock Fall 30%?
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In nine of the last ten calendar years, American Airlines (AAL) stock fell 30% or more from one close to a later close within the same year. A decline of that size would be nothing new. The concern this time is not sales, which grew 19.3% in the third quarter of 2026, but a cost that has eaten most of that growth. So what is that cost, and how much has it taken so far?
American Airlines Is Paying Far More For Fuel
The cost is fuel, and management itself brought it up on the October 22, 2026 earnings call. Higher fuel added $1.9 billion to American’s costs in the third quarter, management said. The airline paid $3.85 per gallon, $1.48 more than in the same quarter a year earlier.
Management expects the extra cost to grow. Based on fuel prices as of October 19, the company expects fourth-quarter fuel expense to be about $2.8 billion higher than a year earlier. On the same call, management said that profitability for all carriers is under pressure in this environment.
How Much Of American’s Business Is Exposed To Fuel?
All of it. Fuel is a cost for the entire airline, rather than an expense isolated to one business line. Over the twelve months to September 2026, American generated $61.0 billion of revenue, up 12.3% from a year earlier. Very little of that revenue remains as profit. In the third quarter of 2026, American’s operating margin was 0.8%, compared with 1.2% a year earlier. Over the twelve months, the margin was 1.7%, compared with 7.4% at Delta Air Lines.
Management’s outlook points both ways. It expects fourth-quarter revenue to grow 19.5% to 22.5% from a year earlier, yet it is also guiding to an adjusted loss of $0.50 to $1.10 per diluted share. Because of elevated fuel prices, management now expects American’s growth to slow considerably in 2027, starting with lower aircraft utilization. When fuel prices stabilize, management expects revenue and cost performance to bring meaningful margin expansion.
The shares have already declined. On November 9, 2026, American closed 22.0% below its highest close of the past year, which was set on July 1. The stock trades at 0.15 times sales on a price-to-sales basis, compared with 3.1 for the S&P 500. The airline’s P/E is not meaningful because American lost money over the past twelve months.
How Far Has American Airlines Stock Fallen Before?
Further than the S&P 500 in each of five recent market shocks. In the 2025 tariff shock, between February and June 2025, American’s deepest fall was 43.0%, against 18.9% for the S&P 500. In the 2022 inflation shock and Fed tightening, American fell 37.0%, against 25.4% for the S&P 500.
Debt adds to that risk. American’s total debt equals 396.5% of its market value, compared with 19.4% for the S&P 500. Discussing the balance sheet on the October 22 call, management said the real key to lowering leverage is earnings rather than transactions.
The fuel threat is real and already showing in American’s results. After the fall from July, the price appears to assume part of it. A holder is betting that American’s sales can grow faster than its fuel bill. The price American pays for a gallon of fuel is the figure to watch in its fourth-quarter report, expected in January 2027.
Does This Mean You Should Act On AAL?
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