American Airlines cuts guidance as fuel costs surge, shares tumble

(Sharecast News) - American Airlines shares fell sharply on Thursday after the carrier cut its full-year earnings outlook, overshadowing record second-quarter revenue and better-than-expected adjusted earnings. The airline reported second-quarter revenue of $16.7bn, up 16.3% from a year earlier and the highest quarterly revenue in the company's history.

American said that it was able to offset nearly half of the $2.2bn increase in fuel expenses - which were 83% higher than the year before - with higher air fares.

GAAP net income dropped to $71m, from $599m a year earlier, while adjusted net income fell to $100m from $628m. Adjusted earnings per share of 15 cents still beat the 3 cents-a-share consensus forecast.

Looking ahead, the company guided to a third-quarter adjusted loss per share of between $0.10 and $0.70, and full-year adjusted EPS of -$0.65 to +$0.65.

This was downgraded from a previous range of -$0.40 to +$1.10, reflecting a sharp increase in expected fuel costs despite continued strength in demand and revenue generation.

"American delivered year-over-year revenue growth of more than 16% in the second quarter, exceeding our initial expectations and continuing the momentum we've built across the business," said chief executive Robert Isom.

The stock was down 7.4% at $13.70 by 1610 BST.