American Airlines to take $350m hit from Boeing groundings

Company expects fuel expenses for the year to be about $650m higher than forecast

American Airlines is the number one US airline by passenger traffic.

American Airlines is the number one US airline by passenger traffic.

 

American Airlines Group cut its 2019 profit forecast on Friday, saying it expected to take a $350 million hit from the grounding of Boeing’s 737 MAX planes after cancelling 1,200 flights in the first quarter.

Shares of American Airlines, which owns the second largest fleet of the grounded Boeing aircraft in the United States, were down 3.9 per cent at $32.1 in premarket trading.

The number one US airline by passenger traffic said it now expects its 2019 adjusted profit to be between $4 per share and $6 per share, from a previous forecast of between $5.50 per share and $7.50 per share.

Analysts on average had expected 2019 earnings of $5.63 per share, according to Refinitiv data.

The company expects fuel expenses for the year to be about $650 million higher than its earlier forecast, citing a recent run-up in oil prices.

The worldwide grounding of Boeing’s fuel-efficient, single-aisle workhorse after two fatal crashes is biting into US airlines’ busy spring and summer schedules, forcing hundreds of daily cancellations.

American Airlines also said unit revenue, a closely watched performance metric that compares sales to flight capacity, would be up 1 per cent to 3 per cent in the second quarter.

The company said net income rose to $185 million, or 41 cents per share, in the first quarter ended March 31st, from $159 million, or 34 cents per share, a year earlier.

Total operating revenue rose 2 per cent to $10.58 billion, marginally missing estimates of $10.60 billion, according to Refinitiv data.

Excluding items, the airline earned 52 cents per share, compared to the average analyst estimate of 51 cents per share. – Reuters