American Airlines shares plummet, rising oil prices wild card for carriers
Shares of American Airlines and other airlines tumbled Thursday after it cautioned that higher jet fuel prices could hit its bottom line in 2018.
American dropped almost 6.5% after lowering its forecast for earnings per share to between $5 and $6 from $5.50 and $6.50 per share, which the airline had estimated in late January.
“Higher fuel prices led to a decline in year-over-year earnings, but we are excited about the future,” American Airlines Chairman and CEO Doug Parker said in a statement.
The world’s largest airline released its first-quarter results before the opening bell Thursday, missing Wall Street’s expectations on the top line, but beating bottom line estimates. American reported adjusted earnings per share of 75 cents versus the expectation of 72 cents a share for the three months ended March 31. Its quarterly revenue of $10.4 billion was 5.9% higher from the same period a year earlier, but slightly below estimates of $10.42 billion.
The airline said fuel prices rose nearly 24% in the first quarter of the year from the same period a year earlier.
United Continental Holdings, which reported narrow top- and bottom-line earnings beats last week, and Delta Air Lines, the second largest U.S. airline, both ended the day nearly 3% lower.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAL | AMERICAN AIRLINES GROUP INC. | 13.92 | -0.30 | -2.11% |
| UAL | UNITED AIRLINES HOLDINGS INC. | 52.67 | -1.35 | -2.50% |
| DAL | DELTA AIR LINES INC. | 47.94 | -1.30 | -2.64% |
| LUV | SOUTHWEST AIRLINES CO. | 29.29 | -0.17 | -0.59% |
| JBLU | JETBLUE AIRWAYS CORP. | 5.91 | -0.19 | -3.11% |
Delta’s record revenue in the quarter fell short of Wall Street’s estimate. Its CEO, Ed Bastian, said during an earnings call earlier this month that fuel would be a “wild card” in 2018.
Southwest Airlines, North America’s biggest low-cost carrier, fell 1%. The Texas-based carrier reported before the opening bell on Thursday, posting earnings per share of 75 cents, narrowly beating Wall Street’s estimate of 74 cents. Revenue of $4.9 billion for the quarter missed analysts’ predictions of $5.01 billion, though it was still up 1.9% from a year earlier.
The airline also said that as a result of the fatal accident on Flight 1380 last week, it expected a decline in seat revenue because of softer bookings.