American Airlines shares tumble after it cuts profit estimates
Posted On: Jan 11, 2019
American Airlines shares tumbled Thursday, after the largest U.S. airline cut its profit estimate for 2018 and warned investors that it struggled to grow revenue toward the end of the year.
The cuts dealt another blow to airline stocks, which have largely lagged the broader market over the past year as investors fretted about higher fuel costs and the industry's ability to increase fares and revenue.
American shares were off more than 5 percent in afternoon trading, paring a chunk of its losses from earlier in the session. Other carriers were also sharply lower. United Airlines lost more than 4 percent, while shares of Delta Air Lines and Southwest Airlines were each down more than 1 percent.
American said its revenue per available seat mile, a key industry metric, rose 1.5 percent in the fourth quarter of last year from the year-earlier period, compared with a range of 1.5 percent to as much as 3.5 percent it gave investors in the fall.
American said it expects to post 2018 per-share earnings of between $4.40 and $4.60, down from its estimate in October of $4.50 to $5.
The company's shares have dropped far more than its competitors. Over the last 12 months, American's stock price declined 44 percent, ramping up pressure on the company's CEO, Doug Parker, when the company reports fourth-quarter and full-year results on Jan. 24.