Shares of American Airlines fell 13.4% in premarket trading Wednesday, dragging down peers Delta Air Lines, Southwest Airlin and United Airlines, which fell between 1.5% and 2.5%.
American Airlines shares plummeted 14% after projections for the second half
Reuters
Today was not a good day for American Airlines, since The company suffered a collapse on Wall Street of up to almost 14% after cutting profit forecasts for the second quarter of 2024. This news dragged down the price of the rest of the airlines, according to Reuters on Yahoo Finance.
According to the firm, The cut is due to a weakening of pricing power despite expectations of record travel demand in the summer season.
American Airlines shares fell 13.4% in premarket trading Wednesday, dragging down peers Delta Air Lines, Southwest Airlines and United Airlinesthat They fell between 1.5% and 2.5%.
The Fort Worth, Texas-based company revised its forecast Tuesday and now expects second-quarter adjusted earnings in the range of $1.00 to $1.15 per share.compared to previous expectations of $1.15 to $1.45 per share.
On Tuesday, the company announced the departure of commercial director Vasu Raja, who headed the new sales and distribution strategy. As part of this strategy, American tried to rework its contracts with corporate travel agencies and clients, cutting benefits and discounts. It also reduced its sales team.
Raja also strongly encouraged a plan that sought to force customers to make reservations directly with the airline rather than through third-party sites and travel agencies.
For his part, American Airlines CEO Robert Isom promised on Wednesday readjust the airline’s sales and distribution strategy after cutting its profit forecasts for the current quarter despite strong travel demand.
Isom blamed changes in the airline’s sales strategy for lower customer bookings, adding that American is evaluating its strategy “holistically and piece by piece.” “To the extent that our approach has alienated customers from American, we are unequivocally committed to winning those customers back”he said at the Bernstein Strategic Decision conference.
Source: Ambito
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