(Reuters) - American Airlines Group Inc <AAL.O>, the world's biggest airline operator, said it expected a fall in its adjusted pretax margin in the current quarter, sending the company's shares down as much as 3 percent in morning trading on Thursday.
The airline said it expected a pretax margin, excluding special items, of between 4 percent and 6 percent in the current quarter, which J.P. Morgan analyst Jamie Baker said would put it at the bottom of the industry.
That margin was 14 percent in the third quarter ended Sept. 30, down from 17.7 percent in the year-earlier quarter.
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The company said its net income fell to $737 million, or $1.40 per share, from $1.69 billion, or $2.49 per share, in the same period of 2015, as an income tax provision jumped to $452 million from $16 million.
Excluding special items, the company earned $1.76 per share, beating the average analyst estimate of $1.69, according to Thomson Reuters I/B/E/S. Revenue fell 1.1 percent to $10.59 billion, slightly ahead of expectations.
Fort Worth, Texas-based American said the decline in revenue reflected competitive capacity growth, economic weakness outside of the United States and a strong dollar.
Attacks in Brussels and Paris have discouraged some Americans from visiting Europe, while new competition has emerged on transatlantic routes in the form of budget carriers such as Norwegian Air Shuttle ASA <NWC.OL>.
American's aircraft fuel costs and related taxes fell 12.6 percent to $1.39 billion in the third quarter.
Still, the era of low fuel costs that boosted U.S. airline earnings starting in 2014 looks to be ending as U.S. crude prices have nearly doubled since bottoming in February.
American's unit revenue, which compares sales to how many seats the airline flies and how far it flies them, fell 3.5 percent during the quarter.
The company recognized $294 million in net special pretax charges in the quarter, mainly integration costs. The company bought US Airways in late 2013.
Up to Wednesday's close of $40.35, American Airlines shares had fallen 4 percent this year. The stock was down 0.5 percent in early afternoon trading.
(Reporting by Rachit Vats in Bengaluru; Editing by Saumyadeb Chakrabarty and Ted Kerr)