tiprankstipranks
American Airlines Stock (AAL) Declined on Guidance Cut
Market News

American Airlines Stock (AAL) Declined on Guidance Cut

Story Highlights

Shares of American Airlines declined yesterday after the company lowered its Q2 earnings and revenue guidance.

American Airlines (NASDAQ:AAL) stock declined about 3% in yesterday’s regular trading session and another 7.7% at the time of writing. The decline comes after the company lowered its outlook for the second quarter. The guidance cut reflects reduced demand during the upcoming summer travel season, which is typically the busiest time for U.S. carriers.

Don't Miss our Black Friday Offers:

Following the guidance-cut announcement, shares of other airline companies, such as United Airlines (UAL) and Delta Air Lines (DAL), also declined by 2.1% and 3%, respectively, on Tuesday.

Revised Guidance of AAL

American Airlines has revised its Q2 adjusted earnings outlook to $1 to $1.15 per share, down from the previous forecast of between $1.15 and $1.45 per share. Furthermore, the company expects a 5% to 6% year-over-year decline in total revenue per available seat mile, compared to the earlier projection of a 1% to 3% decrease.

The company has also reduced its average fuel cost outlook between $2.70 and $2.80 per gallon, versus the previous estimate of $2.75 to $2.95 per gallon.

Meanwhile, American Airlines has lowered its operating margin expectations to 8.5% to 10.5% from the prior guidance of 9.5% to 11.5%.

American Airlines CCO Steps Down

In a separate development, AAL announced the departure of its chief commercial officer, Vasu Raja, who was responsible for the company’s new business strategy.  

The company stated that its vice chair and chief strategy officer, Stephen Johnson, will assume Raja’s responsibilities until a permanent replacement is found.

Is AAL Stock a Buy or Sell?

Analysts remain cautiously optimistic about AAL stock, with a Moderate Buy consensus rating based on nine Buys, one Hold, and two Sells. Over the past six months, shares of the company have increased by about 10%. The analysts’ average price target on American Airlines stock of $18.15 implies an upside potential of 35% from current levels.

Disclosure

Related Articles
Steve AndersonWhat’s Next for Boeing (NYSE:BA) in Space?
TheFlyAirline stocks could see best gains in years, Barron’s says
TheFlyAmerican Airlines resumed with a Neutral at Goldman Sachs
Go Ad-Free with Our App