American Airlines Cuts Full-Year Guidance but Stock Rises After Initial Drop
American Airlines reported a record second-quarter revenue of $16.7 billion and posted both GAAP and non-GAAP profits, despite cutting its full-year guidance due to rising fuel costs. The stock initially fell about 8% after the report on Thursday before rebounding with an impressive 6.8% gain on Friday. The revised outlook for adjusted earnings per share ranges from a loss of $0.65 to a profit of $0.65, compared to prior expectations between -$0.40 and +$1.10. The guidance was impacted by over $2.2 billion in increased fuel costs during the quarter, which accounted for more than 13% of total revenue. Investors on Friday appeared optimistic about American Airlines' ability to offset some of these rising expenses through higher fares and expected continued strong demand with third-quarter revenue growth projected at 16-19%. However, concerns remain as a loss is still forecasted in the third quarter despite it being typically the strongest period for airlines.
Tickers: $AAL
Topics: airline industry fuel costs revenue growth stock volatility