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Here's Why Airline Stocks (AAL, UAL, DAL) Are Slumping Today
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Shares of several major airline stocks moved sharply lower in morning trading Wednesday after domestic giant American Airlines (AAL - Free Report) lowered its unit revenue and unit cost guidance for the second quarter.
American said it expects unit revenue—the ever-important total revenue per available seat mile (TRASM) metric—to improve 1% to 3%, down from its previous guidance of 1.5% to 3.5% growth. This would still mark American’s seventh consecutive quarter of TRASM growth, but the company cited lower-than-anticipated domestic yields as the reason for its lowered guidance.
Meanwhile, American lowered its outlook for Q2 capacity to 72.9 billion available seat miles from 73.1 billion and increased its estimate for average fuel prices to $2.24 - $2.29 per gallon from $2.18 - $2.23 per gallon.
American also said that a technology issue which resulted in one of its regional carriers, PSA Airlines, cancelling about 3,000 flights last month would reduce pre-tax income by about $35 million.
Shares of American Airlines were down more than 6% to touch an intraday low of $36.59 in early morning trading Wednesday. Elsewhere, “Big Three” rivals Delta (DAL - Free Report) and United (UAL - Free Report) were both more than 3% lower.
Budget airlines and regional carriers were also affected by the industry-wide slump. Alaska (ALK - Free Report) dropped as much as 5%, Southwest (LUV - Free Report) tumbled about 2%, and Spirit (SAVE - Free Report) was down roughly 4%.
Overall, the U.S. Global Jets ETF (JETS - Free Report) slumped about 2% in morning trading.
The airline industry continues to struggle in the face of rising fuel and labor costs, shifting trends, and global economic uncertainty. Nevertheless, investors will hope that some carriers can report strong summer travel results and help motivate a rebound.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Here's Why Airline Stocks (AAL, UAL, DAL) Are Slumping Today
Shares of several major airline stocks moved sharply lower in morning trading Wednesday after domestic giant American Airlines (AAL - Free Report) lowered its unit revenue and unit cost guidance for the second quarter.
American said it expects unit revenue—the ever-important total revenue per available seat mile (TRASM) metric—to improve 1% to 3%, down from its previous guidance of 1.5% to 3.5% growth. This would still mark American’s seventh consecutive quarter of TRASM growth, but the company cited lower-than-anticipated domestic yields as the reason for its lowered guidance.
Meanwhile, American lowered its outlook for Q2 capacity to 72.9 billion available seat miles from 73.1 billion and increased its estimate for average fuel prices to $2.24 - $2.29 per gallon from $2.18 - $2.23 per gallon.
American also said that a technology issue which resulted in one of its regional carriers, PSA Airlines, cancelling about 3,000 flights last month would reduce pre-tax income by about $35 million.
Shares of American Airlines were down more than 6% to touch an intraday low of $36.59 in early morning trading Wednesday. Elsewhere, “Big Three” rivals Delta (DAL - Free Report) and United (UAL - Free Report) were both more than 3% lower.
Budget airlines and regional carriers were also affected by the industry-wide slump. Alaska (ALK - Free Report) dropped as much as 5%, Southwest (LUV - Free Report) tumbled about 2%, and Spirit (SAVE - Free Report) was down roughly 4%.
Overall, the U.S. Global Jets ETF (JETS - Free Report) slumped about 2% in morning trading.
The airline industry continues to struggle in the face of rising fuel and labor costs, shifting trends, and global economic uncertainty. Nevertheless, investors will hope that some carriers can report strong summer travel results and help motivate a rebound.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>