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American Airlines Revises Financial Outlook Amid Economic Challenges

American Airlines has decided to retract its financial projections for 2025, aligning itself with other carriers facing a challenging outlook against the backdrop of the U.S. economy and a disappointing year for leisure travel bookings.

In an interview on CNBC’s “Squawk Box,” CEO Robert Isom explained, “Coming off a strong fourth quarter, we initially saw good business in January; however, there was a significant downturn in domestic leisure travel as we entered February.”

The airline noted that its slight 0.7% increase in unit revenue during the first quarter was bolstered by robust international bookings and an uptick in premium cabin sales. This sentiment resonates with observations from other airlines, including Delta and United, which reported that price-sensitive leisure travelers have been less active in booking trips.

Looking ahead, American Airlines is forecasting second-quarter revenues to potentially decrease by as much as 2% from the previous year, while also anticipating an increase of up to 1%. This marks a deviation from Wall Street analysts’ expectations of a 2.2% rise, even as the airline’s capacity is projected to increase by up to 4% in the upcoming quarter. Adjusted earnings per share are expected to fall between 50 cents and $1, contrasting with analyst predictions of around 99 cents per share.

The airline highlighted an anticipated capacity increase of between 2% and 4% year-over-year for the second quarter.

In its first-quarter performance, American Airlines reported the following results in comparison to Wall Street estimates from LSEG:

Loss per share: 59 cents adjusted versus an expected loss of 65 cents
Revenue: $12.55 billion compared to an expected $12.6 billion

For the first quarter, American Airlines recorded a loss of $473 million, an increase from last year’s $312 million loss, with revenues at $12.55 billion, marking minimal year-on-year change. After accounting for one-time adjustments, the airline’s loss per share was reported at 59 cents.

Notably, capacity saw a decline of 0.8% compared to the previous year.

American Airlines indicated that its efforts to restore its corporate travel segment, following prior strategic missteps, are yielding positive developments. However, these improvements have been tempered by “economic uncertainty that has negatively affected domestic leisure demand,” alongside the unfortunate incident involving American Eagle Flight 5342. This tragedy occurred in January, when an Army helicopter collided with an American regional jet on approach to Washington D.C., resulting in the loss of all 67 individuals on board the two aircraft.

Source
www.cnbc.com