American Airlines shares slumped near 10% Thursday after the carrier’s third-quarter profit forecast fell in need of Wall Street’s expectations and the airline reinstated its 2025 financial forecast well below its outlook at the beginning of the yr.
CEO Robert Isom told CNBC’s “Squawk Box” that the outcomes are driven by consumer weakness, flat corporate travel demand that continued into the beginning of the summer and operational problems from a series of storms.
“July’s been a tricky month … due to the domestic consumer weakness,” Isom said.
Demand appears higher in the approaching months, he said, and American is scaling back its capability growth.
Delta Air Lines and United Airlines earlier this month said travel demand has stabilized, though each carriers issued lower 2025 forecasts than at the start of the yr.
American on Thursday forecast a 2025 adjusted per-share lack of as much as 20 cents or earnings of as much as 80 cents, down from adjusted earnings estimates of between $1.70 and $2.70 it made in January. American, together with other airlines, pulled its 2025 financial outlook in April as carriers grappled with on-again, off-again tariffs and weaker-than-expected domestic demand.
For the third quarter, American said it expects an adjusted per-share lack of 10 cents to 60 cents, while analysts polled by LSEG estimated a 7-cent loss.
The airline said in an earnings release that it only expects the low end of its forecast if “there have been to be macro weaknesses that usually are not seen today” and the high end if the domestic travel market continues to enhance.
Domestic travel demand has been a weak spot this yr, though many U.S. travelers have continued to fly abroad in droves to popular destinations like Japan and Italy. American’s passenger revenue per available domestic seat mile, a pricing power gauge, was down greater than 6% within the second quarter, while it was up nearly 3% for international.
Here is how American performed within the second quarter compared with Wall Street estimates compiled by LSEG:
- Earnings per share:Â 95 cents adjusted vs. 78 cents
- Revenue:Â $14.39 billion vs. $14.3 billion expected
Within the three months ended June 30, American’s revenue rose 0.4% to $14.39 billion, ahead of expectations, while net income dropped 16.5% to $599 million, or 91 cents a share. Adjusting for one-time items, American posted earnings of $628 million, or 95 cents a share, well ahead of analysts’ expectations.
Correction: This story has been updated to correct the earnings per share for the second quarter.
