Why American Airlines Stock Tumbled Today

Despite American Airlines (AAL) reporting an earnings beat for Q2 earlier today, its shares dropped by 7.2% before 10:55 a.m. ET on Thursday.

Experts predicted that the airline’s earnings per share (EPS), excluding unusual events, would be approximately 0.77 dollars on a total revenue of 14.3 billion for Q2. However, the actual EPS was 0.95 dollars, and the sales figure reached 14.4 billion.

American Airlines Q2 earnings

It appears there’s a discrepancy between the reported earnings following standard accounting practices and an adjusted figure of $0.91. This drop in earnings (10%) occurred even though the company’s quarterly revenue remained relatively stable compared to last year.

It’s clear that profit margins have dropped. The question is why. One significant factor seems to be an increase in costs related to employee salaries, wages, and benefits, which rose by about 11% compared to last year. Additionally, landing fees experienced a growth of approximately 7%. These are some of the most notable variations that we’ve observed.

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Is American Airlines stock a sell?

In my observation, it appears that the costs aren’t the primary worry for investors at present. Instead, there seems to be a growing apprehension about broader economic instabilities, often referred to as “macroeconomic weaknesses,” which seem to be influencing the companies’ outlook.

American Airlines management admits they’re concerned despite not finding an immediate cause for worry at the moment. After announcing strong Q2 earnings, they cautioned investors about potential losses in Q3 – predicting a decrease of up to $0.60 per share – and hinted that full-year profits could range from a modest $0.80 per share to as low as a $0.20 per-share loss.

The possibilities for this year’s results are quite broad, and it’s almost a given that AA will incur losses during the current quarter. Given that their market capitalization is just $7.8 billion while they carry over $28 billion in debt and face impending losses, investors might want to think twice before investing in AAL stock.

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2025-07-24 18:51