Airline Investors Spooked by American's Guidance as Revenue Concerns Linger

American Airlines released its first quarter earnings guidance on Wednesday, revealing higher earnings and costs than anticipated. However, the guidance fell short of expectations, disappointing investors and analysts. American’s earnings per share are projected to be between one and six cents, compared to the previously estimated breakeven EPS. The consensus estimate was for a higher profit. Bank of America analyst Andrew Didora predicted nine-cent EPS, while the Visible Alpha consensus estimate was three cents. American’s shares closed down 9% on Wednesday, with Delta’s down 2% and United’s down 7%. Despite the disappointing guidance, Cowen analyst Helane Becker had a contrarian view, citing “a better than expected first quarter.” America’s TRASM, or total revenue per available seat mile, is expected to increase by 25.5% compared to the first quarter of 2022. Its CASM, cost per available seat mile excluding fuel, is expected to decrease by 1.5%. United is set to report earnings on April 19, while America is expected to report on April 20. The focus of the earnings season is expected to be on 2Q revenue guidance and commentary on the upcoming peak summer travel season.