US Airlines warn of reduced earnings per share this quarter, causing stocks to plummet over 8%

Shares of American Airlines (NASDAQ: AAL) fell more than 8% in pre-market trading on Foreign foreign exchange transactionsWednesday after the company warned that it expects earnings per share to decline this quarter.

The company lowered its second-quarter earnings per share forecast to $1.00 to $1.15, down from the previous estimate of $1.15 to $1.45. Total revenue per available seat mile (TRASM) is also expected to decrease by 5% to 6%, compared to the previous estimate of a 1% to 3% decline.

"American Airlines' [second-quarter] revenue guidance may have included more ambitious underlying assumptions (compared to peers) when initially provided," analysts at Evercore ISI noted in a report to clients.

Quarterly flight capacity is expected to match the corresponding three-month period in 2023. The company previously stated this number would increase by 7% to 9%.

Despite lowering estimates for fuel expenses and cost per available seat mile, the company's operating profit margin guidance was also reduced to 8.5% to 10.5%, from the previous range of 9.5% to 11.5%.

Meanwhile, the company announced that Chief Commercial Officer Vasu Raja will leave in June. Some market watchers believe this move could spark questions about American Airlines’ “strategic positioning.”

“[American’s] [long-term] strategy clearly needs some time to execute,” analysts at Jefferies commented in a report, downgrading the company's rating from “buy” to “hold.”

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