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American Airlines shares fell into negative territory for 2025 as the company set a weaker than expected profit outlook that stood in stark contrast to the rosier guidance of peers.
The Texas-based carrier said it expected adjusted earnings of between $1.70 and $2.70 a share this year, with the midpoint of that range about 9 per cent below the $2.42 a share expected by Wall Street. It also forecast a deeper loss in the current quarter than analysts pencilled in.
The guidance contrasted with sunnier forecasts from rivals Delta Air Lines and United Airlines. Delta, talking up consumers’ keenness for travel, set first quarter and full-year earnings outlooks that exceeded Wall Street forecasts, while the bottom end of United’s adjusted EPS forecast for its first quarter came in about 39 per cent higher than analysts expected.
American pinned its outlook on travel demand and the cost of fuel. The company is also still recovering from a mis-step last year that alienated corporate travellers, causing some to defect to other carriers.
American’s then-chief commercial officer Vasu Raja attempted to push travellers to book directly with the airline rather than through third-party travel agencies, which is how network carriers have traditionally sold seats to business travellers. The strategy ended up making it more difficult to book with American, hurting sales, and Raja left the airline in June.
Delta and United said this month that corporate travel, which yields higher fares, is strengthening, but American is trying to regain its historical share.
American shares closed 8.7 per cent lower on Thursday, their biggest one-day drop in eight months. That wiped out the stock’s gains so far this year and widened its underperformance of Delta and United.
American earned $14bn in revenue in 2023 from selling tickets through intermediaries. It lost 11 per cent of its market share in the second quarter of last year and has been recovering since then. It forecast it will have narrowed its market share loss to 7 per cent of its historical share by the end of the first quarter, and will be back where it was by the end of the year.
Chief executive Robert Isom said on Thursday that the company had inked new contracts with agencies representing both corporate travellers and its most profitable leisure companies.
“We have reviewed and reworked agreements with our corporate customers most affected by the previous strategy and largely restored share of those travellers in our hub markets,” he said. “Completing these steps provides a strong foundation for us to continue to compete and restore our share.”
American reported net income of $590mn on revenue of $13.66bn in its fourth quarter, up from a year ago and better than analyst forecasts. However, the company’s expectations for an adjusted loss of between 20 and 40 cents a share in the first three months of 2025 is deeper than Wall Street expected.
