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.
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.
