American Airlines Shares fell more than 5% in premarket trading Thursday after the airline slashed its profit outlook for the year, citing a failed sales strategy and industry-wide oversupply that has forced it to discount seats.
According to LSEG, American said it expects earnings per share of 70 cents to $1.30 this year, well below the $2.25 to $3.25 it forecast in April and below the $1.10 to $2.60 per share that Wall Street analysts had been expecting.
The Fort Worth, Texas-based airline estimates that unit revenue could fall as much as 4.5% in the third quarter due to increased travel demand but oversupply of flights.
The airline has tried unsuccessfully to reverse its direct-to-consumer strategy, saying in an earnings call Thursday that it had taken “quick and aggressive action to recalibrate its sales and distribution strategy” after receiving complaints from travel agents and customers.
“While American has a fleet, network and products built to perform, we did not meet our initial expectations in the second quarter due to our previous sales and distribution strategy and domestic supply and demand imbalances,” American CEO Robert Isom said in a press release.
Here’s how American performed in the second quarter compared to Wall Street estimates compiled by LSEG:
- Earnings per share: Expected $1.05 vs adjusted $1.09
- revenue: $143.3 billion vs $143.6 billion expected
Southwest Airlines’ second-quarter net income fell 46% to $717 million, or $1.01 per share, even as revenue rose 2% to $14.33 billion.
Adjusting for one-time items, the airline reported earnings of $1.09 per share.
The US results are out next southwest airlines It also reported a 46% drop in quarterly profit and said it was taking “urgent” action to boost sales.
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