US Airlines warn of reduced earnings per share this quarter, causing stocks to plummet over 8%

Shares of American Airlines (NASDAQ: AAL) fell more than 8% in pre-market trading on Where to open an account for foreign exchange trading?Wednesday after the company warned that it expects earnings per share to decline this quarter.

The company lowered its second-quarter earnings per share forecast to $1.00 to $1.15, down from the previous estimate of $1.15 to $1.45. Total revenue per available seat mile (TRASM) is also expected to decrease by 5% to 6%, compared to the previous estimate of a 1% to 3% decline.

"American Airlines' [second-quarter] revenue guidance may have included more ambitious underlying assumptions (compared to peers) when initially provided," analysts at Evercore ISI noted in a report to clients.

Quarterly flight capacity is expected to match the corresponding three-month period in 2023. The company previously stated this number would increase by 7% to 9%.

Despite lowering estimates for fuel expenses and cost per available seat mile, the company's operating profit margin guidance was also reduced to 8.5% to 10.5%, from the previous range of 9.5% to 11.5%.

Meanwhile, the company announced that Chief Commercial Officer Vasu Raja will leave in June. Some market watchers believe this move could spark questions about American Airlines’ “strategic positioning.”

“[American’s] [long-term] strategy clearly needs some time to execute,” analysts at Jefferies commented in a report, downgrading the company's rating from “buy” to “hold.”

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