Categories LATEST

American Airlines’ downbeat outlook leaves airline sector in the red

American Airlines (AAL), which carried above 198 million passengers in 2017 and holds “the largest airlines of the US” title in terms of the number of passengers consecutively for five years from 2013, clipped its outlook for the second quarter. The downbeat outlook made American Airlines stock register its new yearly low ($35.90) and it also pulled down other airline companies in the Wall Street today.

The company cut down its total revenue per available seat mile (TRASM) growth guidance to approx. 1-3% from the previous growth guidance of approx. 1.5-3.5%, citing the lower than anticipated domestic yields. On a positive note, the company expects costs per available seat mile (CASM) excluding fuel and special items to be up about 2.5% versus the previous growth estimate of about 3.5%.

The carrier expects pre-tax special items to amount to about $215 million, which includes merger integration costs and fleet restructuring expenses. Capex guidance was increased from the earlier estimate of $410 million to $535 million now as the there was a shift in the timing of new aircraft deliveries.

Related: American Airlines hits 52-week low

The Fort Worth, Texas-based airlines also updated that its subsidiary PSA Airlines’ operations were impacted by an IT issue, which made the airlines to cancel around 3,000 flights for a week in June. The company projects that this issue would affect its pre-tax income negatively by about $35 million.

Related: American Airlines reports Q1 2018 results

The airline industry has been affected badly by the surge in the fuel costs. The trimmed outlook of American Airlines added woes to the already struggling peers of the company. Alaska Air Group (ALK), United Continental (UAL), Delta Air Lines (DAL), Southwest Airlines (LUV), and JetBlue Airways were down about 4.3%, 3.4%, 1.5%, 0.9%, and 1%, respectively.

At the end of today’s trading session, shares of American Airlines plunged 8% to $35.96. AAL stock has tumbled about 30% both in the year-to-date period and past one year. The company is expected to announce the results for 2Q later this month.

 

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top