American Airlines lowered its full-year profits outlook after disclosing second quarter net profit almost halved to $717 million from the same period a year earlier.
It comes after the carrier at the end of May lowered its second quarter outlook and outlined plans to reset its under-performing distribution and corporate sales strategy.
While the carrier posted its highest every quarterly revenue figure of $14.3 billion, an increase of 2% on the same period last year, chief executive Robert Isom acknowledged its performance was below expectations.
”American has a fleet, network and product built to deliver results, but during the second quarter, we did not perform to our initial expectations due to our prior sales and distribution strategy and an imbalance of domestic supply and demand,” says Isom.
American’s operating profit fell to $1.4 billion in the second quarter from $2.2 billion 12 months earlier. Net profit roughly halved from over $1.3 billion to $717 million.
While the carrier says it has taken ”aggressive action to improve its revenue performance”, its says its previous sales and distribution strategy will ”continue to impact” its revenue performance and earnings for the remainder of the year.
It adds that accounting for these impacts and based on present demand trends and fuel price expectations, it expects third quarter diluted earnings per share to be around breakeven and between $0.70 and $1.30 per share for the year. By contrast at the end of the first quarter, American was guiding for full-year adjusted earnings per share of between $2.25 and $3.25.
“We are taking this challenge head-on, with clear and decisive actions to deliver on a strategy that maximizes our revenue and profitability, and importantly, one that makes it easy for customers to do business with American,” says Isom. ”When we return to the level of revenue generation we know we can achieve, and we couple that with our operational reliability and best-in-class cost management, we will unlock significant value.”
