American Airlines Downgrades Forecast and Loses CCO

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American Airlines recently revised its financial forecast downward and announced that Chief Commercial Officer Vasu Raja will leave his position next month. This comes amid a challenging period for the airline, which has been underperforming compared to rivals Delta and United Airlines. The company now expects a sharper decline in unit revenues for Q2 and has lowered its earnings per share estimate to $1-$1.15. Raja’s departure follows recent strategic changes aimed at increasing direct bookings. Vice Chair Stephen Johnson will temporarily assume Raja’s duties. Following the news, American Airlines' stock fell over 8% in after-hours trading.

Key Points:

* Unit revenue expected to decline up to 6% in Q2 2024 (previously forecast at max 3% decline).
* Adjusted earnings per share for Q2 2024 lowered to $1.00-$1.15 (previously $1.15-$1.45).
* CCO Vasu Raja is to depart next month, following recent commercial strategy changes.
* Challenges include weaker international connectivity and pushback from corporate customers on new ticket distribution strategies.
* American Airlines stock dropped over 8% after the announcement.

Trading Idea:

* Short American Airlines (AAL) with a stop-loss at $16.41.
* Target prices (T.P.) for downside move: $10.89, $7.61, $4.06 (and further down to $2.89).