American Airlines Lowers Full-Year Guidance but Stock Rises After Initial Drop
American Airlines (NASDAQ: AAL) reported strong second-quarter results with record revenue of $16.7 billion and net income of $99 million on a non-GAAP basis, yet it cut its full-year earnings guidance to between -$0.65 and +$0.65 per share from -$0.40 to +$1.10 previously. The stock initially fell 8% after the report but rebounded strongly with an over 6.8% gain on Friday as investors reassessed the outlook. The guidance cut was primarily due to a sharp rise in aircraft fuel costs, which increased by $2.2 billion year-over-year and accounted for more than 13% of quarterly revenue. However, management noted that American offset nearly half of this cost through higher fares and expects third-quarter fuel prices to decline slightly from the second quarter's average. Investors appeared encouraged by continued strong demand with a projected acceleration in Q3 revenue growth (16-19%) compared to 16.3% for Q2, as well as signs that external factors—like volatile fuel costs—are driving performance rather than operational issues.