American Airlines The CEO vowed on Thursday he would proceed “carefully” and ensure capability didn’t outstrip demand after the airline cut its profit forecast for the yr after a backfired sales strategy and an industry-wide oversupply of flights forced airlines to supply seat discounts.
According to LSEG, American expects adjusted earnings of 70 cents to $1.30 per share this yr, well below the $2.25 to $3.25 per share forecast in April and below the $1.10 to $2.60 per share that Wall Street analysts had expected.
The Fort Worth, Texas-based airline also estimated that its revenue per unit would fall by as much as 4.5% within the third quarter as high travel demand didn’t offset the oversupply of flights.
American’s profit fell 46 percent within the second quarter to $717 million, or $1.01 per share, at the same time as revenue rose 2 percent to $14.33 billion. Airlines are facing oversupply within the domestic market, and managers at American and other carriers plan to reduce capability growth within the second half of the yr.
American expects capability growth of around 3.5 percent within the second half of the yr. This is lower than the expansion in the primary half of the yr, when it increased by around 8 percent, and corresponds to an estimate from May.
“As we look to the fourth quarter and beyond, we will respond to the market and make sure we are competitive but at the same time do the right thing for profitability,” CEO Robert Isom said on a conference call Thursday. “As we look to 2025, we will be very careful and make sure we don’t outpace demand.”
American also reversed the policies of a direct-to-consumer sales strategy it introduced in 2023 that backfired. In a Result announcement On Thursday, the corporate said it had “taken swift and vigorous action to re-orient its sales and distribution strategy” following complaints from travel agents and customers.
Isom said on the conference call that the strategy, which aimed to bring more bookings to American’s platforms but alienated some corporate customers who didn’t have access to all the airline’s fares, would cost the airline about $1.5 billion in revenue this yr.
Here’s how American performed within the second quarter in comparison with Wall Street estimates compiled by LSEG:
- Earnings per share: $1.09 adjusted vs. $1.05 expected
- Revenue: $14.33 billion in comparison with expected $14.36 billion
Adjusted for one-time items, earnings per share were $1.09, above the $1.05 per share expected by analysts.
The Americans’ results come after Southwest Airlines The company also reported a 46% drop in quarterly profit and said it was taking “urgent” steps to extend sales.
