American Airlines Sees Bigger Foreign Exchange Impact

American Airlines Group Inc. said Friday that its passenger traffic edged down 0.6% in March, as the carrier also said it incurred higher-than-expected foreign-exchange losses in its first quarter.

As a result of a strengthening dollar, American Airlines lowered the top end of its pretax-margin forecast by one percentage point, now calling for a margin of 12% to 13%. Meanwhile, the carrier lowered its fuel-cost guidance for the quarter by a penny and forecast a smaller-than-anticipated decline in a key revenue metric.

For the month of March, the world's largest airline by traffic said capacity fell 0.9%, while the portion of seats filled--or load factor--rose by 0.3 percentage point to 82.1%.

For the first quarter, the Fort Worth, Texas, company said it now expects its unit revenue--the amount of passenger revenue produced for each seat flown a mile--to be down 1% to 3%, compared to its previous estimate for a decline of between 2% and 4%.

The company expects average fuel costs of $1.80 to $1.85 a gallon, compared with its February view for $1.81 to $1.86 a gallon.

American merged with US Airways in December 2013 to become the world's largest airline by traffic after the old American parent emerged from bankruptcy protection. Soon after, American shed its fuel-hedging positions to come into alignment with US Airways' no-hedging philosophy.

This has given American an advantage over some of its large competitors whose hedges cost them money when fuel prices collapsed.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com and Tess Stynes at tess.stynes@wsj.com