American Airlines nasdaq Aal Stock Plummets Amid Lowered Outlook and Executive Departur

American Airlines (NASDAQ: AAL) Stock Plummets Amid Lowered Outlook and Executive Departur

American Airlines (NASDAQ: AAL) stock tumbled during intraday trading Wednesday after the company lowered its current-quarter outlook and the sudden departure of its chief commercial officer, Vasu Raja.

American Airlines (AAL), the world’s largest airline by fleet size, has adjusted its second-quarter guidance, signaling challenges ahead despite an anticipated surge in travel demand. 

The airline now forecasts a unit revenue decline between 5% and 6%, a significant revision from its earlier projection of a 1% to 3% contraction. Additionally, American Airlines has lowered its bottom-line guidance, with adjusted earnings expected to range between $1 and $1.15 per share, down from the prior projection of $1.15 to $1.45 per share. Analysts had estimated adjusted earnings of $1.30 per share.

The revised guidance comes despite expectations of record-level travel demand during summer. Airlines for America (A4A), a trade association and lobbying group, forecasts U.S. carriers to transport 271 million passengers over the 2024 summer season, representing a 6.3% increase from the previous year.

Chief Commercial Officer Departs

In a related development, American Airlines announced the resignation of Chief Commercial Officer Vasu Raja, effective next month. Raja has held the position for over two years and will be temporarily succeeded by Stephen Johnson, the airline’s Vice Chair and Chief Strategy Officer.

Raja played an instrumental role in the airline’s post-pandemic strategy shift towards direct sales, transitioning away from ticket sales through agencies.  While this strategy aimed to streamline sales processes and improve margins, some analysts argue that it contributed to the airline losing corporate business travel market share to competitors like United Airlines (NASDAQ: UAL) and Delta Air Lines (NYSE: DAL). In the first quarter of 2024, American reported a high-single digit growth in business revenue, whereas Delta and United posted double-digit increases.

American Airlines (NASDAQ: AAL) Stock Price Action

On Wednesday, AAL stock plunged 13.54%, closing at $11.62, marking a 17.18% decrease for the week. The trading volume was 157,241,610 shares, significantly higher than the average daily volume of 30.18 million.