American Airlines stock tumbles after cutting Q2 guidance

Shares of American Airlines (AAL) are sinking after the company cut its second quarter sales outlook.

Yahoo Finance’s Pras Subramanian reports more on the story and breaks down what it could indicate about the airline sector as a whole.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video Transcript

Let’s go to the skies here.

American airline shares.

They are sinking this morning after cutting its sales outlook for the second quarter.

The airline also announcing its chief commercial Officer will leave his role next month.

Yahoo Finances Pro Superman has some of the details on this one for us.

Stock sinking this morning.

Almost 10%.

Ross.

Yeah.

Yeah, you know the getting hit there and that revised ALEC also seeing adjusted EPS for Q two in the one to dollar 15 range that was down for a dollar 45 so big cut for the current quarter.

Uh The original points to some trouble here with summer travel when most airlines are sort of doing well.

Uh There are some issues that all airlines are dealing with.

Right.

Uh Middle East tensions, consumers looking for more discounts than revenge traveler is sort of going away this this summer, but they still want to travel a little bit, but they don’t want to spend uh exorbitant fees for it.

Uh And but the American sort of revision revisions here with, with, with both profit and revenue, they seem worse than expected.

Plus you mentioned the Chief Commercial Officer Vasu Raja leaving.

Seems he made some bets on things like reducing long haul routes.

L A to New York which are really lucrative.

He started focusing on the Sun Belt, which I think is good business, but it’s not as lucrative as these bigger longer flights.

And the company needs some more general revenue, they need more revenue.

It’s not, it’s not meeting expectations here for right now.

And it’s concerns.

Why is this happening to American?

Is it just an American problem?

Yeah, and that is the question, is this an American problem or are we starting to see some of this weakness?

When you take a look at some of the other larger domestic players, we had, we had uh players like Ryanair talk about uh uh consumers a bit more cautious but Delta United, they’re not warning about revenue.

They’re doing actually pretty quite well these days.

I mean, I know Brad, you’re pretty close to Delta, you’ve heard the same as well.

So I think it’s potentially an American issue.

Um currency o is known as a good operator, but they might need uh more of a sales figure to come in there and really kind of pump up uh getting after that business consumer uh reestablished some of those longer haul flight routes which just take time and, and uh and from what I understand, they, they sort of di diminish the New York to L A business, which was, which is a big business, but then also hard to build back up as you have.

Story continues

Other obviously Delta and United are big there too.

So that’s sort of highlights some of the challenges Americans face right now.

Uh Once one of the more preman airlines in the world, yeah, I mean, look when you think about the broader airlines space here too, the the larger thing for the summer travel is where companies have started to talk about where demand should be holding steady even as we’re kind of going towards this, this cruising altitude of normalization if you will versus what are some of the problems specific as you were laying it out to American Air versus some of the other airlines out there?

We still don’t know what the ultra low cost carriers are gonna have to navigate during this interim period of time as well.

But at least for this period, it seems like united even as they had presented or at least given some of the updates going into the busy spring break and then summer travel season, they were seeing demand hold steady right now too.

So we’ll continue to track all of these.

But right now the American airline taking it on the chin and a lot of the other major airlines down here as well in extended hours, we’ll see where things open up.

Pro Thanks so much.