American Airlines (AAL) Stock Plummets as Q1 2025 Outlook Dimmed by Demand Woes and Flight 5342 Impact

11 March, 2025 | 3 Min Read

tickers: LUV, DAL

tickers affected by this

ticker	polarity	why?
LUV	positively	Southwest Airlines, represented by the ticker LUV, is likely to be positively affected by the challenges faced by American Airlines. The downturn in the domestic leisure segment and broader industry concerns may lead travelers to seek more reliable and cost-effective alternatives, potentially boosting demand for Southwest Airlines. Additionally, Southwest’s initiatives to accelerate EBIT contribution and stock buybacks could further enhance investor confidence and drive up the stock price.
DAL	positively	Delta Air Lines (DAL) may experience some positive impact as American Airlines’ (AAL) revised outlook highlights broader industry issues, including market sentiment changes, downturn in domestic leisure segment and reduced government travel, presenting Deltas an opportunity to attract travelers.

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summary

American Airlines Faces Tough Q1 2025

American Airlines has revised its first-quarter 2025 financial outlook, now projecting flat revenue and a wider loss per share. The airline attributes this downgrade to weak demand and the impact of Flight 5342. Shares of American Airlines Group Inc. (AAL) have been trading lower today.

Weak Demand and Flight 5342 Impact Revenue

The updated outlook reflects challenges from Flight 5342 and a downturn in the domestic leisure segment, particularly in March. The airline now expects its total revenue for the first quarter to be flat compared to the first quarter of 2024. This is a significant revision from the previous expectation of a 3% to 5% growth in revenue.

American Airlines anticipates an adjusted loss per diluted share between $0.60 to $0.80. This is a considerable revision from the prior forecast of a $0.20 to $0.40 loss per share. The analyst consensus estimate had pegged the loss at $0.25.

Industry-wide Concerns and Market Reaction

The airline industry is facing broader concerns, including a shift in investor sentiment due to worries over domestic capacity, changing consumer behavior, and reduced government travel. Jamie Baker, a JP Morgan analyst, highlighted these concerns earlier this month. These issues have led to a slowdown in share price momentum for 2025, contrasting with the rapid gains seen in late 2024.

Comparisons with Peers

Other airlines are also experiencing similar challenges. Delta Air Lines has also downgraded its revenue growth forecast for the March quarter, now expecting a 3% to 4% growth, down from the previous estimate of 7% to 9%. Conversely, Southwest Airlines has seen its shares rise, buoyed by initiatives aimed at accelerating EBIT contribution and stock buybacks. Price Action: AAL stock is down 6.8% at $11.65 at last check Tuesday.