American Airlines cut its profit forecast for the second quarter of 2024, causing a slump in its shares greater than what other airlines are seeing, despite the promising summer travel season. 

According to Reuters, the airline’s shares dropped nearly eight percent in premarket trading on Wednesday, May 29. By comparison, Delta Air Lines, Southwest Airlines and United Airlines fell between 1.5 percent and 2.5 percent. 

It also adjusted its second-quarter adjusted earnings for shareholders to be between $1.00 to $1.15 per share, changed from its original projection of $1.15 to $1.45 per share. 

Why did it fall so much in comparison? 

American Airlines has been focusing on growing its market share in smaller markets, but excess capacity has hurt its pricing. Industry-wide, premium travel in the U.S. is still high, but airfare prices to Europe and Asia are plateauing and sometimes even falling. This spring, it announced eight new winter routes and an expanded schedule to desirable destinations like St. Vincent and the Grenadines. 

Jeffries, which is a global leader in full-service investment banking and capital markets, told Reuters it had downgraded American Airlines’ stock to “hold” as its growth strategy has not worked as planned. 

The news about the stock slump comes on the heels of the American Airlines announcement that its Executive Vice President and Chief Commercial Officer, Vasu Raja, will be leaving the company in June. 

Raja has been in his role with the airline since April 2022, but has been with American since 2004. Effective immediately, Stephen Johnson, the Vice Chair and Chief Strategy Officer, will assume his duties and lead the search for Raja’s replacement. 

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