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Business News/ Markets / Stock Markets/  US stock markets: American Airlines shares plunge over 14% on Q2 profit forecast cut
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US stock markets: American Airlines shares plunge over 14% on Q2 profit forecast cut

At 1:12 p.m. EDT, American Airlines shares were at $11.46, down 14.73 per cent

American Airlines has called off some of the changes aimed at driving up direct bookings. REUTERSPremium
American Airlines has called off some of the changes aimed at driving up direct bookings. REUTERS

Shares of American Airlines Group Inc. plunged more than 14 per cent in New York on Wednesday after the company cut its second quarter profit forecast.

At 1:12 p.m. EDT, American Airlines shares were at $11.46, down 14.73 per cent.

In a regulatory filing with the Securities and Exchange Commission, American Airlines said that it anticipates second quarter adjusted earnings in a range of $1 to $1.15 per share. 

Earlier, the company had forecast $1.15 to $1.45 per share.

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It expects total revenue per available seat mile in the second quarter down approximately between 5 per cent to 6 per cent.

Earlier, it had predicted a fall of about 1 per cent to 3 per cent.

It also lowered expectations for operating margin and for non-fuel unit costs.

“Our expectation for domestic performance has worsened materially since we provided guidance in April," American Airlines chief executive officer Robert Isom said on Wednesday at the Bernstein Strategic Decision conference.

The revision in forecast “is largely due to a softer domestic environment than we were expecting and our performance within that environment," he added. 

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American Airlines, based in Fort Worth, Texas, also said that chief commercial officer (CCO) Vasu Raja will be leaving the company in June. He had joined the company in 2004. 

Isom also said: “We are evaluating strategically, holistically and piece by piece."

The company has also called off some of the changes aimed at driving up direct bookings.

“Sometimes we need to reset," Isom said. “And in this case, we do."

“The degree our approach has driven customers away from American, we're unequivocally committed to getting those customers back," he said.

Wall Street

US stocks dropped on Wednesday, as concerns around the timing and scale of the Federal Reserve's interest rate cuts pushed Treasury yields higher.

At 11:51 a.m., the Dow Jones Industrial Average fell 348.51 points, or 0.90 per cent, to 38,504.35, the S&P 500 lost 32.77 points, or 0.62 per cent, to 5,273.27 and the Nasdaq Composite lost 75.58 points, or 0.44 per cent, to 16,944.30.

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Published: 29 May 2024, 10:33 PM IST
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