American Airlines Stock Down 24.6% in a month: More Pain Ahead?

Shares of American Airlines AAL have performed disappointingly lately. Shares of this Fort Worth, TX-based company have slipped 24.6% over the past 30 days, performing worse than the Zacks Transportation - Airline industry’s 5.2% decline.. One-Month Price ComparisonImage Source: Zacks Investment ResearchGiven this below-par price performance, let us delve deep to unearth the reasons behind this and also find out if there is scope for a rebound or is more pain in store for AAL.American Airlines revised its first-quarter 2025 guidance downward at the J.P. Morgan Industrials Conference. Air travel demand is being hit by the slowdown in consumer spending and recessionary fears.Citing a slowdown in consumer and corporate travel demand, AAL now expects a loss per share of 60-80 cents in the first quarter of 2025 compared with the prior expected loss of 20-40 cents. First-quarter total revenues are now anticipated to be approximately flat on a year-over-year basis. This marks a downfall from the prior expectation of 3-5% year-over-year growth.System capacity is still estimated to be either flat or decrease up to 2% from first-quarter 2024 levels. Cost per available seat miles (adjusted) in the March quarter is still expected to increase in high-single digits from first-quarter 2024 actuals.AAL has lost business travelers to its competitors due to a faulty sales strategy implemented in 2023. The company spent much of 2024 correcting the mistake and rebuilding its sales strategy to lure more corporate accounts. The carrier is making slow progress in its effort to regain corporate travel. The downward guidance due to recessionary fears is proving to be a setback to those efforts.The plane mishap on Jan. 29 is another setback. On that day, an AAL regional jet collided with a U.S. Army helicopter in Washington, DC. The collision with a military helicopter killed all 64 people on board. This was the first major commercial airline crash since 2009. The aircraft went down in the Potomac River, breaking into multiple pieces. Other carriers like Delta Air Lines DAL and JetBlue Airways JBLU too have revised their first-quarter projections lower.We believe that this slowdown in air travel demand (particularly for leisure) is short-lived and airlines including AAL will regain lost ground in the second quarter of 2025. Even President Trump has indicated that the economy is in a “period of transition” amid escalating trade tensions.AAL’s Estimate Revisions Moving SouthDriven by the above-mentioned headwinds, the Zacks Consensus Estimate for earnings at AAL has moved down over the past 60 days for first-quarter 2025, second-quarter 2025, and full-year 2025 and 2026.Image Source: Zacks Investment ResearchAAL’s Zacks RankAAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Delta Air Lines, Inc. (DAL): Free Stock Analysis Report JetBlue Airways Corporation (JBLU): Free Stock Analysis Report American Airlines Group Inc. (AAL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks