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American Airlines reduces expectations for the second quarter with the departure of its commercial director
American Airlines is reducing some of its financial forecasts for the second quarter and announced the departure of its chief commercial officer.
Shares fell more than 14% on Wednesday and shares of all other airlines also fell. Passenger airlines were among the worst performers in the S&P.
American Airlines said in a regulatory filing with the Securities and Exchange Commission that it now forecasts second-quarter adjusted earnings in the range of $1 to $1.15 per share. Its previous forecast was $1.15 to $1.45 per share. Analysts surveyed by FactSet forecast earnings per share in the second quarter of US$1.20, on average.
Total revenue per available seat mile is now expected to decline approximately 5% to 6%. Its previous forecast was for a decline of about 1% to 3%.
The airline said in the filing that CCO Vasu Raja will leave the company next month. He joined the company in 2004. Stephen Johnson, vice president and chief strategy officer, was appointed to lead the commercial organization and assist in the search for a new chief commercial officer.
In February, American Airlines announced that starting with tickets issued May 1, customers would have to purchase tickets directly from the airline or its partner carriers or from preferred online travel agencies if they wanted to earn points in its AAdvantage loyalty program. The airline said at the time that it would list preferred travel agencies at the end of April.
When the changes were announced, Raja said in a prepared statement that American Airlines was looking to make travel more convenient for customers and that by booking directly with the airline, customers would get the best fares and it would be more rewarding for members. of your loyalty program. .
But the changes were met with criticism from some customers, who were unhappy with the limitations placed on how they could earn points for the loyalty program.
American Airlines CEO Robert Isom, speaking at the Bernstein Strategic Decisions Conference on Wednesday, said Raja was an innovator and disruptor but that change was needed.
“He’s a good friend, but sometimes we need to reset. And in this case, we do,” Isom said. “We have to be better at executing these long-term plans. We have to pay more attention to the market. We have to be more detail-oriented and move forward as a team and really make it easier for American to do business.”
Isom said at the conference that American Airlines no longer plans to differentiate between who earns AAdvantage miles and who doesn’t based on where they booked.
“We’re not doing that because it would create confusion and disruption for our end customer, and we’re going to make sure we take care of that,” he said. “We are listening to feedback. We are learning and adapting.”
In April, the pilots’ union in American Airlines said there was “a significant increase” in safety problems at the airline, including fewer routine aircraft inspections and shorter test flights on planes returning from major maintenance work.
Fort Worth, Texas-based American Airlines said at the time that it has an industry-leading safety management system. An airline spokesperson then said that the airline is in regular contact with regulators and unions “to further reinforce our strong safety record and improve our constantly evolving safety culture”.