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American Airlines Warns Fuel Costs to Cut Q4 Capacity Plans

American Airlines faces $1B in extra Q4 fuel costs, prompting capacity cuts as United, Southwest, and Alaska Airlines follow suit.

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Photo: American Airlines

This article summarizes reporting by Reuters by Rajesh Kumar Singh and Shivansh Tiwary.

Airlines Group Inc. (AAL) executives warned on September 16, 2026, that a sudden spike in jet fuel prices will force the carrier to scale back its flight growth plans for the late fourth quarter of the year.

Speaking at the Morgan Stanley 14th Annual Laguna Conference in Laguna Beach, California, CEO Robert Isom and CFO Devon May detailed the financial impact of rising energy costs. According to Reuters, the airline faces an estimated $1 billion in additional fuel expenses for the fourth quarter, driven by a price increase of approximately $1 per gallon compared to the company’s July assumptions.

Fuel cost pressures and capacity adjustments

The rapid escalation in fuel costs is eroding profit margins across the U.S. aviation sector. May confirmed the airline’s strategy to mitigate the financial hit. “We’ll continue to adjust capacity for late in the fourth quarter considering what’s happening with fuel,” May said, according to Travel Weekly. Every one-cent increase in fuel prices translates to an approximate $10 million change in the airline’s quarterly costs.

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Isom noted that persistently high fuel prices require a reassessment of future capacity planning.

“If fuel prices remain as high as they are right now, I think that that’s going to require some adjustments in terms of our capacity planning as we take a look out into the future,” Isom said, according to Morningstar.

The broader industry is facing identical headwinds. At the same conference, United Airlines Holdings Inc. (UAL) CFO Mike Leskinen stated that United would cancel select December flights and could extend capacity reductions into 2027. Southwest Airlines Co. (LUV) and Alaska Airlines have similarly revised their fourth-quarter growth targets downward. Travel Weekly reported that the fuel price surge is largely tied to geopolitical tensions involving Iran, which have elevated Brent crude oil prices.

Revenue performance and premium seating strategy

Despite the cost pressures, American Airlines maintains strong revenue generation. The carrier’s forecast for third-quarter year-over-year revenue growth remains on track at 16% to 19%. Isom emphasized that strong travel demand and higher fares have allowed the airline to offset a significant portion of the increased fuel expense. “We’ve absolutely done a great job of recapturing a tremendous amount of that expense,” Isom told Reuters.

A central component of the airline’s strategy to maintain profitability is its focus on premium seating. According to Investing.com, premium cabins account for 30% of the seats on American Airlines flights but generate approximately 50% of the company’s total revenue. Isom indicated that the carrier is expanding its premium seating options across the fleet to capitalize on this higher-yielding segment.

AirPro News analysis

We observe that the rapid pivot by major U.S. carriers to trim fourth-quarter capacity underscores the fragility of airline margins in the current geopolitical environment. While American Airlines and United Airlines have successfully leveraged premium leisure demand to bolster revenue, the sheer scale of a $1 billion quarterly fuel cost increase cannot be entirely offset by fare hikes. The industry’s collective decision to reduce late-2026 capacity will likely result in tighter seat inventory and sustained high fares for consumers during the holiday travel season.

Sources: American Airlines, Reuters

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Airlines Strategy

Lufthansa Signs Deal for 44.9 Percent Stake in TAP Air Portugal

Lufthansa and Portugal signed the deal for a 44.9 percent TAP Air Portugal stake for 1.025 billion euros, pending European Commission approval.

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Lufthansa Signs Deal for 44.9 Percent Stake in TAP Air Portugal
Photo: Lufthansa Group

The Lufthansa Group and the Portuguese government signed an agreement at Humberto Delgado Airport in Lisbon on November 3, 2026, for Lufthansa to acquire an initial 44.9 percent minority stake in TAP Air Portugal for 1.025 billion euros. The transaction still needs approval from the relevant authorities, in particular the European Commission, before it can be completed.

In a press release dated November 3, 2026, the Lufthansa Group called the signing a decisive milestone in TAP’s privatization. The release also puts a figure on the commercial case: Lufthansa estimates the synergies at up to 450 million euros and says a minority stake already allows it to realize most of them.

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What the agreement covers

According to the Lufthansa Group, the purchase price for the initial 44.9 percent stake is financed entirely from available liquidity. The stake could rise to up to 49.9 percent through the possible acquisition of shares initially offered to TAP employees. Including a ticking fee, the total purchase price could reach up to 1.2 billion euros.

Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG, described the signing in the release:

“Today’s signing is an excellent signal that extends far into our shared future with TAP Air Portugal.”

Spohr said the two networks complement each other and that the partnership opens growth opportunities in Portugal, South America and Brazil, with the aim of developing Lisbon into a Lufthansa Group hub. He also thanked the Portuguese government for its privatization process.

Lisbon as the group’s seventh hub

Lufthansa said its growth plans center on expanding TAP’s network, especially the links between Portugal and Brazil, Portuguese-speaking Africa and North America. Lisbon would become the seventh hub of the Lufthansa Group, and Porto, the Azores, Madeira and the Algarve are also part of the strategy.

The release gives the market share at stake. Lufthansa says its current share of traffic between Europe and Latin America is about nine percent, and that the calculated combined share with TAP would be about 20 percent.

TAP Air Portugal (TP), founded in 1945, is a Star Alliance member, according to its AirPro Atlas profile. The Atlas lists a single runway at Lisbon Humberto Delgado Airport (LIS), runway 02/20, at 12,500 feet. Among the three pillars that Minister of Infrastructure and Housing Miguel Pinto Luz set out for the privatization is an aviation strategy that includes the development of the new Lisbon airport and added airport capacity.

From bid to signing

The signing follows a privatization process that the government says involved two and a half years of preparation. On April 23, 2026, the Council of Ministers invited Air France-KLM and Lufthansa to submit binding offers in the final phase of the privatization. The government said at the time that it intended to sell up to 49.9 percent of TAP’s share capital: 44.9 percent to an investor and up to 5 percent reserved for workers.

The Lufthansa Group submitted its bid to Parpública, the Portuguese state-owned investment company, on July 29, 2026. In a release dated October 14, 2026, Lufthansa welcomed the government’s decision to pick its offer, which AirPro News covered as Portugal’s choice of the Lufthansa bid. In that release, Lufthansa said it expected to sign the acquisition agreements shortly.

The government’s own summary of the decision, dated October 15, 2026, said the operation brings in 1,201 million euros and that the Portuguese State keeps a majority stake of 50.1 percent in TAP. It said Lufthansa’s financial proposal was 16 percent higher than the competing proposal and carried less uncertainty, while the technical proposals and contractual conditions were considered equivalent. The government also said it planned to sign the first-phase documents by the end of 2026.

Fleet and maintenance commitments

The government’s summary lists the commitments in the Lufthansa proposal: TAP’s fleet growing to 117 aircraft by 2035 and 130 after that, with estimated additional investment of 3 to 4 billion euros; the possible transfer of up to eight Airbus A350-900s after 2030; modernisation of the Portugália fleet; and Porto’s Francisco Sá Carneiro Airport becoming a second operating base with eight long-haul aircraft. TAP keeps its brand, its headquarters in Portugal and the Lisbon hub, and remains in Star Alliance.

For maintenance, the government cites about 300 million euros of investment and 700 jobs at the Lufthansa Technik center in Santa Maria da Feira, near Porto. Lufthansa says ground was broken on the site in June and that it is expected to raise the group’s direct jobs in Portugal to more than 1,000 by 2030, from more than 500 professionals working for Lufthansa Group companies in the country. The group’s airlines currently offer 353 weekly flights to six destinations in Portugal, which Lufthansa says is a 75 percent increase compared with 2019.

What comes next

Lufthansa said the transaction will be completed once all required regulatory approvals are received. The government said in October that the regulatory procedures include the European Commission, through its Directorate-General for Competition, and Portugal’s National Civil Aviation Authority (ANAC).

A second phase is also in view. The Lufthansa Group says it expressly welcomes the prospect of a full privatization of TAP and that a majority stake would offer further opportunities to accelerate TAP’s growth and competitiveness. According to the government, a possible second privatization phase, which could proceed by 2028, would include the acquisition of a majority of TAP’s capital, bringing in an additional 863 million euros and a share swap valued at 488 million euros, equal to 5 percent of the combined group. The government estimates that the operation, with share appreciation and future dividends up to 2040, could recover about 3.4 billion euros, against more than 3.2 billion euros of public investment in the airline.

AirPro News analysis

The two parties frame the same deal from different ends. Lufthansa’s case rests on network share: from about nine percent to about 20 percent of traffic between Europe and Latin America, with most of the estimated synergies available from a minority position. The government’s case rests on keeping 50.1 percent now while leaving room for a second phase by 2028 that would include a majority stake for Lufthansa and a share swap equal to 5 percent of the combined group.

For operators, lessors and MRO shops, we see the figures to watch in the fleet and maintenance plan: 117 aircraft by 2035, up to eight A350-900s after 2030, a Porto base with eight long-haul aircraft and the Santa Maria da Feira site. Each of those plans sits behind the regulatory approvals that both Lufthansa and the government list as conditions for completion.

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Aircraft Orders & Deliveries

Avolon Finalizes Record Lessor Order for 140 Boeing 737-10 Jets

Avolon has finalized 140 Boeing 737-10s, which Boeing calls a record lessor order, lifting Avolon’s 737 MAX backlog past 240 jets.

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Avolon Finalizes Record Lessor Order for 140 Boeing 737-10 Jets
Photo: Boeing

Avolon has finalized its purchase of 140 Boeing 737-10 airplanes, which Boeing describes as a record 737 MAX order by a lessor. The deal brings Avolon’s 737 MAX backlog to more than 240 unfilled orders, according to Boeing, and commits the lessor to the largest member of the 737 MAX family.

Boeing and Avolon announced the agreement in Seattle on November 4, 2026, in a release published on Boeing’s investor relations site. It follows Avolon’s own release of October 8, 2026, in which the lessor reported a firm order for 140 737 MAX aircraft as part of its 250-aircraft Boeing and Airbus order, subject only to approval by the shareholders of Bohai Leasing Co., Ltd., Avolon’s 70% shareholder.

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Why lessors are moving to the 737-10

Boeing set the order against growing lessor demand for the largest 737 MAX variant. According to the release, lessors placed firm orders for more than 230 737-10 airplanes in 2026, five times the lessor backlog for the variant at the end of 2025. Boeing said large single-aisle jets such as the 737-10 are the fastest-growing segment of commercial aviation.

According to the release, the 737-10 lets Avolon meet demand for larger single-aisle jets while drawing on the versatility of the 737 family, which Boeing says has a large customer base and low operating costs.

The manufacturer said the 737-10 offers the best per-seat economics of any single-aisle airplane, with seating for up to 230 passengers and a range of 3,100 nautical miles (5,740 kilometers). AirPro News has also covered Aerolíneas Argentinas’ six 737-10 leases from ACG.

“The 737-10 combines outstanding economics with the capacity airlines increasingly require,” said Andy Cronin, Avolon’s CEO. He said the order strengthens Avolon’s long-term delivery pipeline and its partnership with Boeing.

Brad McMullen, Boeing’s Senior Vice President of Commercial Sales and Marketing, said Avolon’s growing 737 MAX portfolio helps airlines modernize their fleets with lower emissions and operating costs, and that Boeing stands ready to support lessors expanding their single-aisle portfolios.

The 737 in lessor portfolios

Boeing described the 737 as a cornerstone of most lessors’ portfolios, representing about 30% of all financed airplanes. Lessors have ordered more than 1,450 737 MAX airplanes, about 20% of Boeing’s backlog, according to the release. Boeing said projected 4% annual passenger traffic growth over the next 20 years is pushing lessors to broaden their single-aisle offerings.

The release does not give delivery dates for the 140 aircraft or name the airlines that will lease them.

Where the order sits in Avolon’s fleet plan

In its October 8 release, Avolon said it had placed firm orders for 250 new-technology aircraft: 140 737 MAX aircraft from Boeing and 110 aircraft from Airbus, made up of 75 A320neo family and 35 A330neo family aircraft, with options for a further 100 aircraft. The orders raised Avolon’s total firm aircraft commitments to 749 aircraft, and the lessor said they support the long-term fleet requirements of its airline customers.

The same release carried Avolon’s third-quarter 2026 update. The lessor acquired 10 aircraft and sold 29 in the quarter, with 112 more agreed for sale at quarter-end. It placed 28 new-technology aircraft from its commitments, leaving 89% of its committed fleet placed for the next 24 months, and executed 84 lease agreements, extensions and amendments.

Avolon ended the quarter with an owned, managed and committed fleet of 1,092 aircraft as of September 30, 2026, or 1,342 pro forma for the new orders. It also established a US$1.5 billion commercial paper programme and closed a US$855 million unsecured term loan with a syndicate of primarily Asian banks. The company says it works with 138 airlines in 62 countries.

Cronin said in October that Avolon was seeing strong demand for new-technology aircraft, reflected in its third-quarter placement and trading activity, and that the orders would enhance its ability to support airlines renewing and expanding their fleets. The Boeing order lands days after Avolon’s Constellation Aviation launch.

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Aircraft Orders & Deliveries

Eve Air Mobility and FlyBIS Sign Binding Deal for Up to 12 eVTOLs

Eve Air Mobility and FlyBIS signed a binding agreement for up to 12 eVTOLs, two firm and ten purchase rights, for Southern Brazil.

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Eve Air Mobility and FlyBIS Sign Binding Deal for Up to 12 eVTOLs
Photo: Embraer

Eve Air Mobility and advanced air mobility startup FlyBIS Aviation Limited have signed a binding agreement for up to 12 electric vertical takeoff and landing (eVTOL) aircraft, made up of two firm orders and purchase rights for ten more. The deal builds on a 2022 letter of intent that covered up to 40 aircraft, and is aimed at routes in Southern Brazil.

The companies announced the agreement in a press release dated November 4, 2026, from Melbourne, Florida, published on the Embraer media center. According to the release, FlyBIS plans to deploy Eve’s eVTOL in Southern Brazil, initially linking destinations in the states of Santa Catarina and Rio Grande do Sul. The release does not disclose the value of the order or a delivery schedule.

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The routes FlyBIS has in mind

The release names potential routes on the Santa Catarina coast, including Navegantes, Balneário Camboriú and Florianópolis, as well as tourism destinations in the mountain region of Rio Grande do Sul, including Gramado and Bento Gonçalves.

“This binding agreement is an important step in our relationship with FlyBIS,” said Johann Bordais, Chief Executive Officer of Eve. Bordais said Southern Brazil has high demand for urban air mobility connections because of its tourism and business activity.

“Signing this binding agreement represents a significant milestone for FlyBIS,” said Gustavo Zanettini, co-founder and Chief Executive Officer of FlyBIS. He cited Eve’s combination of aircraft, services and operational support as a strong foundation.

The two companies will keep working on the requirements for entry into service, including network planning, operational readiness, infrastructure and the integration of eVTOL services into the wider transportation system, according to the release. FlyBIS is also launching a strategic fundraising round to fund fleet acquisition, strategic partnerships and network expansion, the release says.

From a 40-aircraft letter of intent to two firm orders

Eve and FlyBIS first announced their partnership on December 8, 2022. In that release, Eve said it had signed a letter of intent with FlyBIS, which it described as an advanced air mobility startup based in Caxias do Sul, in southern Brazil, covering eVTOL operations in Brazil and South America and the purchase of up to 40 Eve eVTOL vehicles. FlyBIS was backed by Brave Aviation, whose fleet includes the Embraer Phenom 100, and said at the time that it aimed to deliver advanced air mobility (AAM) services to Brazil’s southern states as early as 2026.

The binding agreement covers up to 12 aircraft, against up to 40 in the 2022 letter of intent, and the November release does not say whether the rest of the earlier letter of intent remains in place. In the 2022 announcement, Eve said the FlyBIS aircraft were included in an order backlog of up to 2,770 eVTOLs. At the Farnborough International Airshow in July 2026, Eve gave its pre-order book as approximately 2,700 eVTOLs and listed two binding agreements with pre-delivery payments: up to 50 aircraft for Revo in Brazil and up to 50 aircraft for AirX in Japan, with AirX’s initial deployment in sightseeing and last-mile mobility beginning in 2029. The November release does not say whether the FlyBIS order includes pre-delivery payments.

Eve’s November release calls Brazil one of its most important markets, with two operators already committed and several others interested. AirPro News reported on Eve’s other 2026 commitments, including the Shearwater leasing letter of intent signed at Farnborough.

Where Eve’s flight test program stands

According to the November 4 release, Eve’s full-scale engineering prototype has completed more than 70 flights, including hover and low-speed phases. Transition-flight testing is progressing, including in-flight activation of the rear pusher propulsion system, as the aircraft moves toward wing-borne flight. AirPro News covered the first in-flight activation of the pusher propeller in August.

In its July 2026 release, Eve said the engineering prototype first flew in December 2025, that partial transition flights were planned for the summer with full transitions later in the year, and that production of six conforming prototypes would begin later in 2026.

On the regulatory side, the November release says that in September 2026, Brazil’s Ministry of Ports and Airports convened aviation authorities, government representatives and Eve to discuss certification, vertiport infrastructure, energy supply, operational safety, telecommunications and airspace integration. Eve, which says it is backed by Embraer’s 57-year aerospace history, is listed on the New York Stock Exchange (EVEX) and the São Paulo Stock Exchange (EVEB31).

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