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American Airlines shares took a hit in premarket trading after the carrier revised its profit forecast for the year. The airline now expects to earn adjusted 70 cents to $1.30 per share, significantly lower than its previous forecast. This adjustment comes after a failed sales strategy and an oversupply of flights in the industry, leading airlines to slash prices on seats.
American Airlines has been swift in responding to the challenges it faces. The company has acknowledged the shortcomings of its direct-to-consumer sales strategy and is taking aggressive action to realign its sales and distribution approach. CEO Robert Isom emphasized the need to address the imbalance between supply and demand for domestic flights.
In the second quarter, American Airlines reported adjusted earnings per share of $1.09, slightly beating Wall Street expectations. However, revenue fell short of estimates, coming in at $14.33 billion compared to the expected $14.36 billion.
Similarly, Southwest Airlines also reported a decline in profit for the quarter, down 46% to $717 million, despite a slight increase in revenue. The airline is implementing measures to boost revenue and address market challenges.
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