American Airlines cuts pretax earnings by US$400M, blames Boeing 737 Max jets
That, plus an illegal work slowdown by mechanics angling for a better labour contract, are the cause of the slow summer earnings
FORT WORTH, Texas – American Airlines said Thursday that the long grounding of Boeing 737 Max jets will cut its pretax earnings for 2019 by about US$400 million, including $175 million in the second quarter.
American issued the estimate as it announced that second quarter profit rose 19% to $662 million.
The world’s biggest airline has struggled with thousands of cancellations this summer – some caused by the loss of its 24 Max jets and some due to what the airline claims is an illegal work slowdown by mechanics angling for a better labour contract.
Chairman and CEO Doug Parker said employees “did a tremendous job to deliver solid results despite a challenging start to our summer.”
American has removed the Max from its schedule until Nov. 2. Boeing expects regulators to let the plane resume flying in October after it has made changes to flight-control software implicated in two crashes that killed 346 people.
The Fort Worth-based company said that excluding non-repeating costs, it would have earned $1.82 per share, 5 cents better than the average estimate of 10 analysts surveyed by Zacks Investment Research.
American said revenue rose 3% to $11.96 billion, in line with analysts’ forecasts.
Operating costs rose less than 2%, helped by a slight decrease in fuel, the airline’s second-biggest expense behind labour.
American said it expects full-year earnings between $4.50 and $6 per share.
Shares of American Airlines Group Inc. fell 19 cents to $34.40 in trading shortly before Thursday’s opening bell. They have fallen nearly 8% in the last 12 months.