American Airlines Stock Plunges as Rising Fuel Costs Cloud Passenger Demand Surge
Shares of American Airlines Group Inc. took a severe beating on Wall Street on Thursday, falling nearly eight percent to close at $13.62 after the carrier cut its full-year profit outlook for the second time this year. The sharp market reaction underscores the growing strain that elevated jet fuel prices and rising operating expenses are placing on airline profitability, even as international travel demand remains remarkably resilient and passenger ticket prices hover near record highs.
The revised guidance reflects a challenging road ahead for the Fort Worth-based carrier, which now projects its full-year financial results to range between an adjusted loss of 65 cents per share and a profit of 65 cents per share, down significantly from its previous forecast of up to $1.10 in earnings. For the current quarter, management warned investors to expect an adjusted loss between 10 and 70 cents per share, missing consensus estimates by a wide margin despite projecting double-digit revenue growth of up to 19 percent.
The gloomier forward outlook stood in stark contrast to the airline’s actual performance during the second quarter, where top-line results managed to beat market expectations. American Airlines reported $16.74 billion in revenue and an adjusted profit of 15 cents per share, comfortably outperforming analysts' forecasts of three cents per share. However, the surge in fuel expenses tore through the company's bottom line, causing net income to collapse by 88 percent year-over-year from $599 million to just $71 million, illustrating how quickly rising energy costs can erase gains made from strong passenger volume.
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