PUBLISHED 1:06 PM CDT Apr. 12, 2023FORT WORTH, Texas — Airline stocks tumbled Wednesday after American Airlines issued a lackluster outlook that appeared to amplify fears that travel demand, which has surged for the past year, could finally be slowing in the face of inflation and economic uncertainty.
Bank of America analyst Andrew Didora said this week that his bank's data shows that airline bookings have slowed since mid-March, “and we have become a bit more cautious on 2Q23 revenues.” He lowered second-quarter revenue estimates for the big airlines by up to 2%. COVID-19 restrictions may have convinced many Americans to stay stateside last year. United Airlines and others are expanding their international schedules this summer, expecting more overseas trips.
Just the day before, Didora, the Bank of America analyst, said he expected American to report a profit of 9 cents per share. Raymond James analyst Savanthi Syth said she had expected better from American because it benefits more than others from strong demand for travel within the U.S. and nearby destinations in Latin America.
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Airline stocks shares fall on American's so-so 1Q outlookShares of airlines are falling after American issued a lackluster first-quarter outlook and said profit could be below Wall Street expectations. American said Wednesday that it expects to earn between a penny and 5 cents per share for the quarter that just ended. That leaves room for American to fall short of analysts' prediction that the airline would earn 5 cents per share. American indicates that demand for travel remains strong despite inflation and economic uncertainty, which is helping airlines charge higher fares. But they also face rising costs for labor and jet fuel. That’s what happens with inflation making prices jump way up.
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