Earnings outlook
Wall Street anticipates a year-over-year decline in earnings for American Airlines (AAL) in the quarter ended June 2024, despite expectations of higher revenues. Analysts project quarterly earnings of $1.05 per share, representing a 45.3% decrease from the previous year. However, revenues are forecasted to reach $14.42 billion, marking a 2.6% increase from the same quarter last year.
RecentAAL has faced significant challenges recently, with its stock price falling 13% on May 29 following a cut in its second-quarter (Q2) outlook. The company acknowledged losing business travel to rival airlines, partly due to its strategy of focusing on direct website sales and reducing its sales staff. This approach appears to have backfired, resulting in a loss of corporate business to competitors.Financial improvements
Despite these setbacks, AAL has shown some financial improvements. The company’s net income expanded by 547% year-over-year (YoY) to $0.82 billion in 2023, primarily attributed to an expansion of its operating margin and lower non-operating expenses. Both gross and operating margins have seen significant growth since 2021, with the net income margin rising from -18.1% in 2021 to 3.5% in 2023.Fort Worth-based airline chopped its Austin roster earlier this yearAmerican Airlines Group Inc. is canceling another nonstop route from Austin-Bergstrom International Airport.
Flights to Indianapolis will end effective Aug. 6. An airline spokesperson said the cancellation is “part of our evaluation of our capacity growth plans for 2024.”The Austin-Indianapolis route is also served by Allegiant Air and Southwest Airlines.
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The news comes after Fort Worth-based American Airlines (Nasdaq: AAL) pulled 21 of the 46 destinations it offered from ABIA.
Allegiant Travel Co. (Nasdaq: ALGT) also plans to cut seven nonstop routes out of ABIA as the low-cost carrier plans to end base operations in Austin early next year