American Airlines Stock, Southwest Airlines Diverge After First-Quarter

American Airlines (AAL) and Southwest Airlines (LUV) both missed first-quarter revenue expectations Thursday. However, AAL shares jumped early while LUV stock sank as the air carriers offered very different outlooks.

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American Airlines reported a Q1 loss of 34 cents per share, down from earning 5-cents per share a year ago. Meanwhile, the air carrier saw revenue grow 3% to $12.57 billion. Analysts had predicted a loss of 29 cents per share with sales totaling $12.6 billion.

In late January, American Airlines had forecast a Q1 loss of between 15 cents-35 cents.

On Thursday, the company added that, based on current demand and fuel price forecasts, it expects Q2 EPS between $1.15-$1.45. American Airlines also reaffirmed 2024 guidance for earnings between $2.25-$3.25 per share.

Wall Street expects second-quarter earnings of $1.15 per share and full-year EPS of $2.34, according to FactSet.

“While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets,” American Airlines Chief Executive Robert Isom said in the earnings release Thursday.

American Airlines stock advanced 4% before the market opened. AAL shares then pared early losses, gaining 2% during market action Thursday. Meanwhile, Southwest Airlines stock sank 10% after the Dallas-based air carrier reported a Q1 loss of 36 cents per share with revenue increasing 11% to $6.33 billion. Analysts had expected a 34 cent per share loss and sales of $6.42 billion.

Boeing’s Long Shadow Clouds Southwest

Southwest said cost-cutting actions were ongoing and that it had closed its operations at Bellingham International Airport, Houston’s George Bush Intercontinental Airport, Syracuse Hancock International Airport and Mexico’s Cozumel International Airport. The company said it will also reduce operations at Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport.

The air carrier added it is facing “significant challenges” because of Boeing (IBD)BA aircraft delivery delays. Southwest said Thursday these delays will negatively affect its previous expectation for double-digit year-over-year operating revenue growth for 2024. Southwest now forecasts operating revenue growth in the high-single digits.

“We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations,” Southwest Chief Executive Bob Jordan said in the earnings statement Thursday.

American Airlines stock has a 29 Composite Rating out of a best-possible 99. It has a 52 Relative Strength Rating and a lowly 8 EPS Rating.

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