American Airlines reduced its full-year earnings guidance Thursday, citing elevated fuel costs that are outpacing revenue gains from increased fares. The carrier’s stock declined 8% following the announcement.
The airline now projects adjusted earnings per share ranging from a loss of 65 cents to earnings of 65 cents for the year, a significant reduction from the April forecast of a loss of 40 cents to earnings of $1.10 per share. That April guidance itself represented a substantial cut from the company’s initial projection at the start of the year of earnings between $1.70 and $2.70 per share.
For the current quarter, American expects an adjusted loss between 70 cents and 10 cents per share, falling short of Wall Street’s expectation of 28 cents in earnings. However, the airline forecast revenue growth of 16% to 19%, exceeding analyst projections of 16.6% growth. Company executives defended plans to expand flight capacity by as much as 5% in the current quarter despite the challenging operating environment.
In the second quarter ended June 30, American’s profit fell 88% to $71 million, or 11 cents per share, compared to $599 million or 91 cents per share in the prior year period. Revenue increased 16% to $16.74 billion. On an adjusted basis, the carrier posted earnings of 15 cents per share. Passenger revenue per available seat mile, an industry measure of pricing power, rose 10% year-over-year.
Fuel expenses remain airlines’ largest cost category after labor. Executives acknowledged ongoing efforts to close profitability gaps with competitors Delta Air Lines and United Airlines through fleet modernization and premium seating expansions, though no specific timeline was provided for reaching those targets.
Article Attribution | Read More at Article Source
Article summary produced by Claude AI