American Airlines Group (NASDAQ: AAL) shares dropped over 9% on Friday, reflecting a broader weakness in airline stocks. The downturn in the airline sector came after Delta Air Lines (NYSE: DAL) lowered its 2024 earnings guidance, citing concerns about the economy and disruptions in its supply chain.
Delta Air Lines (NYSE: DAL) has revised its 2024 earnings per share (EPS) outlook between $6 to $7. This marks a decrease from its previous estimate of over $7. The company reported earnings of $6.25 per share in the past year.
CEO Ed Bastian stated that the company is exercising caution, considering factors such as the economic outlook, uncertainty related to the airline’s supply chain, and the efficiency of aircraft repairs and return to service.
He said,
“Looking ahead to 2024, the demand for air travel remains robust, and our customer base is financially sound, with travel being a top priority. We anticipate achieving full-year earnings of $6 to $7 per share and generating free cash flow between $3 to $4 billion, thereby further fortifying our financial foundation.”
The warning came as Delta Air Lines posted 5.9% year-over-year growth in operating revenue, soaring to $14.22 billion. The adjusted operating revenue experienced an even more substantial uptick, surging by 11.1% to $13.66 billion, beating the consensus estimate of $13.52 billion.
The adjusted earnings per share (EPS) came in at $1.28, outpacing the consensus forecast of $1.17. The total passenger revenue for the airline reached $12.17 billion, marking a 12% year-over-year increase. However, cargo revenue faced a substantial setback, declining by 24% to $188 million.
American Airlines Group (NASDAQ: AAL) shares plunged 9.46% to $13.21 on Friday.
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