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In morning trading on Thursday American Airlines (AAL, Financial) stock dropped 8% after expected first-quarter income guidance failed to match analyst predictions. Based on current travel expectations and fuel costs, American Airlines estimates an adjusted loss between $0.20 and $0.40 per share which is much worse than the $0.04 loss predicted by analysts.
American Airlines explained that unit costs grew because the airline shifted its aircraft capacity towards regional jets as well as faced expense increases from employee pay adjustments and route service cuts. United Airlines and Delta Airlines (DAL, Financial) now present brighter year expectations but American Airlines released lower guidance which shows big differences between firms.
Despite facing immediate difficulties American Airlines sees continuing growth possibilities. The company predicts its first-quarter revenue will grow 3% to 5% Year Over Year while planning to earn up to 7.5% more revenue by the end of 2023. In response to their failed business-travel strategy the airline expects to take $1.5 billion revenue hit for 2024.
CEO Robert Isom believes in sustaining future growth thanks to American Airlines' reliable global network and shareholder benefits supported by partnerships with Citi and Barclays. American generated 17% year-over-year growth in partnership revenue to $6.1 billion during 2024 and this additional income strengthened its financial health.
This article first appeared on GuruFocus.