American Airlines earnings outlook disappoints, shares fall

investing.com:

By Shivansh Tiwary

(Reuters) -Shares of American Airlines (NASDAQ:AAL) fell on Thursday as its outlook for the second half of the year disappointed investors even as the company lifted its full-year profit forecast and posted higher-than-expected quarterly earnings.

American forecast adjusted profit of $3.00 to $3.75 per share for 2023 compared with its prior outlook of $2.50 to $3.50 per share.

But some analysts said the outlook suggested a slowdown in the company's earnings in the second half compared with the first six months of the year.

«Investors were concerned why American didn't hike full-year guidance as much following their consistent earnings' beats,» said Citi analyst Stephen Trent.

American's shares closed down 6.2% at $17.44.

Analysts are also concerned about a potential increase in American's non-fuel costs after the company reopened negotiations with its pilots to improve their contract agreement.

CEO Robert Isom said the company would match the pay rates rival United Airlines is offering to its pilots in a new deal. That will likely further increase the cost of the agreement, which is currently estimated to be more than $8 billion.

American's revenue forecast also suggested airline ticket prices for domestic travel have peaked, fueling worries about the company's ability to offset cost pressure.

Its total revenue per available seat mile, a proxy for pricing power, in the September quarter is forecast to be down about 4.5% to 6.5% from last year.

Adjusted earnings for the second quarter came in at $1.92 per share, above analysts' consensus earnings estimate of $1.59, according to a Refinitiv survey.