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American Airlines Sees 8% Pre-market Decline as Q2 Earnings Outlook Slashed

In premarket trading on Wednesday, shares of American Airlines (NASDAQ
) plunged over 8% following the company’s announcement of a downward revision in its second-quarter earnings outlook.

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The airline now anticipates earnings per share for the quarter to range between $1.00 to $1.15, down from its previous forecast of $1.15 to $1.45. Additionally, the projected decline in total revenue per available seat mile (TRASM) has been adjusted to 5% to 6%, as opposed to the earlier estimate of 1% to 3%.

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Analysts at Evercore ISI remarked that American’s initial revenue guidance for the quarter likely rested on more optimistic assumptions compared to its industry counterparts.

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Furthermore, American Airlines revised its quarterly flying capacity forecast to match that of the corresponding period in 2023, diverging from its earlier expectation of a 7% to 9% increase.

Despite the company lowering its projections for fuel expenses and cost per available seat mile, its operating margin guidance was downgraded to a range of 8.5% to 10.5%, from the previous 9.5% to 11.5%.

In tandem with the downward revisions, the announcement of the departure of Chief Commercial Officer Vasu Raja in June raised concerns among market observers regarding American’s strategic direction.

Jefferies analysts downgraded their rating of the company from “Buy” to “Hold,” emphasizing that American’s long-term strategy might necessitate a prolonged execution period. They noted that it’s evident the company’s strategic positioning will require time to materialize.

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