American Airlines cuts some 2Q forecasts and reveals commercial chief is leaving

By Staff

The airline predicts second-quarter adjusted earnings to be between $1 and $1.15 per share, down from the previous forecast of $1.15 to $1.45 per share

American Airlines has announced a revision of its second-quarter financial forecasts and the departure of its chief commercial officer, causing shares to fall by over 13% in Wednesday morning’s trading.

The airline, in a regulatory filing with the Securities and Exchange Commission, now predicts second-quarter adjusted earnings to be between $1 and $1.15 per share, down from the previous forecast of $1.15 to $1.45 per share. This is below the average prediction of $1.20 per share by analysts surveyed by FactSet.

Total revenue per available seat mile is also expected to drop by approximately 5% to 6%, compared to the earlier forecast of a 1% to 3% decline. The company also revealed that CCO Vasu Raja will be leaving next month, having been with the company since 2004.

Stephen Johnson, vice chair and chief strategy officer, has been appointed to lead the commercial organisation and assist in finding a new chief commercial officer. In February, American Airlines declared that from May 1, customers wishing to earn points in its AAdvantage loyalty program would need to purchase tickets directly from the airline or its partner carriers, or from preferred online travel agencies.

The airline stated it would list the preferred travel agencies in late April, adding that corporate travellers would not be affected. When the alterations were unveiled, Raja stated in a pre-prepared announcement that American Airlines was aiming to make travel more user-friendly for its customers.

He added that by booking directly with the airline, customers would secure the best fares and it would be most beneficial for its loyalty programme members. However, the changes were met with backlash from some customers, who expressed dissatisfaction with the restrictions being imposed on how they could accumulate points for the loyalty scheme.

In April, the pilots’ union at American Airlines reported that there had been “a significant spike” in safety concerns at the airline, including fewer routine aircraft inspections and abbreviated test flights on planes returning from major maintenance tasks.

American Airlines, headquartered in Fort Worth, Texas, responded at the time by stating that it has an industry-leading safety management system. A spokesperson for the airline also said that the airline maintains regular communication with regulators and unions “to further bolster our strong safety record and enhance our ever-evolving safety culture.”

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