Shares of American Airlines Group Inc. AAL dropped 3.0% toward a four-month low in premarket trading Wednesday, after the air carrier cut its third-quarter earnings outlook, amid higher fuel prices and costs associated with a new labor agreement. The company now expects adjusted earnings per share of approximately 20 cents to 30 cents, down from previous guidance of about 85 cents to 95 cents. The FactSet EPS consensus is 69 cents. The company said the new collective bargaining agreement with the pilots union resulted in an retroactive pay expense of about $230 million, which lowered the adjusted EPS outlook by 23 cents. “The remainder of the adjustment to the company’s updated outlook is driven by higher fuel prices in the quarter,” the company said. The guidance range for the average fuel price per gallon was raised to $2.90 to $3.00 from $2.55 to $2.65. American also revised higher its year-over-year growth outlook for available seat miles to 6% to 7% from 5% to 7%. The stock has shed 13.5% over the past three months while the U.S. Global Jets ETF JETS has declined 9.0% and the S&P 500 SPX has gained 2.1%.

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