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American Airlines' (AAL) Shares Decline on Q1 TRASM View Cut

Zacks Equity Research

American Airlines Group Inc. AAL has provided a bleak guidance for first-quarter 2019 unit revenues and pre-tax margin. Consequently, shares of the company declined 1.7% at the close of business on Apr 9.

The company now anticipates first-quarter total revenue per available seat mile (TRASM) to either remain flat or increase up to 1% year over year. The previous view had expected the metric to improve 0-2% on a year-over-year basis. The downside can be attributed to the effects of the government shutdown, the grounding of its MAX fleet and removal of 14 737-800 aircraft from service. While the MAX 8 groundings caused 1,200 flight cancellations in the first quarter, the sudden removal of 14 737-800 aircraft from its fleet led to another 940 flight cancellations.

Additionally, pre-tax margin, excluding special items, is estimated to be 2-% and 4% in the first quarter compared with 2.5-4.5% expected earlier. The lowered guidance is primarily due to increased fuel prices, which are expected to be in the band of $2.02-$2.07 per gallon. Previously, fuel prices were forecasted in the $1.97-$2.02 range.

Meanwhile, the company has trimmed its non-fuel unit cost guidance owing to lower-than-expected salaries and benefits expense. Cost per available seat mile, excluding fuel and special items, is now anticipated to rise in the 2-4% range compared with an increase of 3-5% projected earlier.

American Airlines Group Inc. Price

 

American Airlines Group Inc. Price | American Airlines Group Inc. Quote


Zacks Rank & Stocks to Consider

American Airlines carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Swire Pacific Ltd. SWRAY, Azul AZUL and LATAM Airlines Group LTM. While Swire Pacific sports a Zacks Rank #1 (Strong Buy), Azul and LATAM Airlines carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Swire Pacific, Azul and LATAM Airlines have rallied 18.7%, 35.2% and 18.2%, respectively, in the past six months.

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American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
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