American Airlines Stock Down 24.6% in a month: More Pain Ahead?
Shares of American Airlines AAL have performed disappointingly lately. Shares of this Fort Worth, TX-based company have slipped 24.6% over the past 30 days, performing worse than the Zacks Transportation - Airline industry’s 5.2% decline..
One-Month Price Comparison
Given this below-par price performance, let us delve deep to unearth the reasons behind this and also find out if there is scope for a rebound or is more pain in store for AAL.
American Airlines revised its first-quarter 2025 guidance downward at the J.P. Morgan Industrials Conference. Air travel demand is being hit by the slowdown in consumer spending and recessionary fears.
Citing a slowdown in consumer and corporate travel demand, AAL now expects a loss per share of 60-80 cents in the first quarter of 2025 compared with the prior expected loss of 20-40 cents. First-quarter total revenues are now anticipated to be approximately flat on a year-over-year basis. This marks a downfall from the prior expectation of 3-5% year-over-year growth.
System capacity is still estimated to be either flat or decrease up to 2% from first-quarter 2024 levels. Cost per available seat miles (adjusted) in the March quarter is still expected to increase in high-single digits from first-quarter 2024 actuals.
AAL has lost business travelers to its competitors due to a faulty sales strategy implemented in 2023. The company spent much of 2024 correcting the mistake and rebuilding its sales strategy to lure more corporate accounts. The carrier is making slow progress in its effort to regain corporate travel. The downward guidance due to recessionary fears is proving to be a setback to those efforts.
The plane mishap on Jan. 29 is another setback. On that day, an AAL regional jet collided with a U.S. Army helicopter in Washington, DC. The collision with a military helicopter killed all 64 people on board. This was the first major commercial airline crash since 2009. The aircraft went down in the Potomac River, breaking into multiple pieces.
Other carriers like Delta Air Lines DAL and JetBlue Airways JBLU too have revised their first-quarter projections lower.
We believe that this slowdown in air travel demand (particularly for leisure) is short-lived and airlines including AAL will regain lost ground in the second quarter of 2025. Even President Trump has indicated that the economy is in a “period of transition” amid escalating trade tensions.
AAL’s Estimate Revisions Moving South
Driven by the above-mentioned headwinds, the Zacks Consensus Estimate for earnings at AAL has moved down over the past 60 days for first-quarter 2025, second-quarter 2025, and full-year 2025 and 2026.
AAL’s Zacks Rank
AAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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