Southwest, JetBlue And Spirit Airlines Shares Are Moving Lower Wednesday: What's Going On?

Zinger Key Points
  • American Airlines lowers its adjusted earnings forecast from a range of $1.15 to $1.45 per share to a new range of $1 to $1.15 per share.
  • American Airlines shares are down more than 8% at the time of writing, weighing on the broader airline sector.
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Several airline stocks including Southwest Airlines Co LUV, JetBlue Airways Corp and Spirit Airlines Inc SAVE are trading lower Wednesday in sympathy with American Airlines Group Inc AAL, which fell on revised guidance.

What Happened With AAL: After the market close on Tuesday, American slashed its second-quarter outlook ahead of a presentation at the Bernstein Strategic Decisions conference.

The airline lowered its adjusted earnings forecast from a range of $1.15 to $1.45 per share to a new range of $1 to $1.15 per share. The company also lowered its guidance for adjusted operating margin by 1% to a new range of approximately 8.5% to 10.5%. 

Total revenue per available seat mile (TRASM) is now expected to be down between 5% and 6% in the second quarter compared to the prior year's quarter. American previously guided for a TRASM decline of 1% to 3%. 

Cost per available seat mile excluding fuel (CASM-ex) is now expected to be flat to up 1% versus prior expectations of approximately 1% to 3%. Average fuel prices are now expected to be between $2.70 and $2.80 per gallon versus prior expectations of $2.75 to $2.95 per gallon.

American Airlines also announced that executive vice president and chief commercial officer Vasu Raja will depart the company in June. Stephen Johnson, vice chair and chief strategy officer, will assume leadership of the commercial organization, effective immediately, and help lead the search for a new chief commercial officer in addition to his current responsibilities.

Following the guidance adjustment, Jefferies analyst Sheila Kahyaoglu downgraded American from Buy to Hold and lowered the price target from $17 to $12. BofA Securities analyst Andrew Didora maintained American with an Underperform and lowered the price target from $12 to $11.

American Airlines shares were down more than 8% at last check, weighing on the broader airline sector.

See Also: What’s Going On With American, United Airlines & Delta Air Lines Shares Today?

LUV, JBLU, SAVE Price Action: At publication time, Southwest shares were down 3.13% at $25.69, JetBlue shares were down 3.17% at $5.20 and Spirit Airlines shares were down 1.08% at $3.68, according to Benzinga Pro.

Photo: Around the World Photos from Shutterstock.

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