American Airlines Group Inc. cut its forecast for second-quarter
unit revenue and pretax margins, adding to concerns about
profitability in the sector.
The largest U.S. airline by traffic now expects passenger
revenue per available seat mile—an important measure of performance
for the industry—will decline roughly 6% to 8%. American previously
had projected a drop of between 4% to 6%. The carrier also again
lowered its pretax margin view by one percentage point to between
16% and 18% for the quarter.
American also reported that its passenger traffic for May rose
0.7% from a year earlier. Capacity increased 2.1% while the
percentage of seats filled—or load factor—declined to 82.8% from
84%.
Analysts and investors have been concerned that low fuel prices
that are helping buoy profits in the sector could be outweighed by
airlines oversupplying the market—a practice that has damaged the
industry's profitability in past years.
On Monday, United Continental Holdings Inc. said its capacity in
May rose 2.1% from a year earlier, and that it expects unit revenue
in the current quarter to fall 5% to 6%, in part because of reduced
travel spending by oil companies. Delta Air Lines Inc. last week
said its unit revenue declined 5.5% in May from a year earlier.
American shares fell 1.7% to $39.20 in recent premarket
trading.
Write to Tess Stynes at tess.stynes@wsj.com
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