American Airlines Shares Drop After Weak Q3 and Full-Year Guidance Despite Strong Q2 Results
American Airlines reported strong financial results for the second quarter of 2025, with earnings and revenues that beat Wall Street expectations. The company earned $0.95 per share in Q2, which was higher than the estimated $0.79 per share, although down from $1.09 per share a year ago.
Despite the positive second-quarter performance, the airline's stock dropped nearly 10% on Thursday. This was mainly due to the company warning of a possible loss in the upcoming third quarter, citing weaker domestic travel demand and continued uncertainty among consumers. American Airlines forecasted an adjusted loss of $0.60 to $0.10 per share for Q3, which was much lower than analysts' expectations of a $0.76 profit.
The company also reinstated its full-year 2025 earnings guidance, now expecting anything from a loss of $0.20 per share to a profit of $0.80 per share. This wide range was attributed to ongoing economic uncertainty and reduced consumer spending on travel. The midpoint of this outlook falls well short of the $0.72 per share profit expected by analysts.
Chief Executive Robert Isom acknowledged challenges such as softened domestic travel demand and operational disruptions from severe weather, but noted optimism about a possible rebound in travel trends later in the year.
The stock dropped because investors were worried about the company's forecast of a possible loss in the next quarter and a weaker full-year guidance than expected.
The company pointed to weaker domestic travel demand, economic uncertainty, and operational disruptions from bad weather.
The company expects full-year 2025 earnings to range from a small loss to a modest profit, reflecting uncertainty in the travel market.
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