American Airlines parent AMR Corp. fell the most since April in New York trading after five analysts widened their full-year loss estimates.
The changes came after AMR forecast third-quarter revenue yesterday that was less than the analysts’ estimates and projections by other big U.S. carriers. The Fort Worth, Texas-based company’s 8.7 percent decline led a drop in the 12-member Bloomberg U.S. Airlines Index.
AMR said American’s quarterly revenue for each seat flown a mile would rise as much as 10.8 percent from a year earlier. That trailed the increases forecast by UAL Corp.’s United Airlines of as much as 19.5 percent and by Delta Air Lines Inc. of up to 15 percent.
“The revenue guidance was slightly weaker than we had anticipated, but only modestly worse,” Bob McAdoo, an Avondale Partners LLC analyst, said in a report. “AMR’s revenue guidance is consistent with its performance last quarter, when its unit revenues lagged” the other major U.S. airlines.
American has been hurt this quarter because it has fewer flights in Asia, where demand has picked up, and extensive routes in Latin America, which is trailing other regions this year, said James M. Higgins, an analyst at New York-based Soleil Securities Corp., and Glenn Engel, a Bank of America Merrill Lynch analyst in New York.
‘Out of Kilter’
“Relative to our expectations for third-quarter regional revenues, AMR is out of kilter by far more than any other airline for which we have recent guidance,” Higgins said in a report. American also may be affected by weakness in investment-banking related travel between New York and London, he said.
American is the only airline among the six largest in the U.S. expected to report a full-year loss, according to estimates compiled by Bloomberg.
AMR slid 60 cents to $6.28 at 4:15 p.m. in New York Stock Exchange composite trading, for the shares’ biggest daily percentage decline since April 21. They have fallen 19 percent this year.
The Bloomberg airlines index dropped 3.2 percent, its biggest slide since Aug. 19.
Jamie Baker at JPMorgan Chase & Co., who rates AMR as “overweight,” had estimated American’s quarterly unit revenue would rise 12.7 percent. Higgins, who has a “hold” rating, expected a 14 percent increase. Other analysts didn’t specify their prior estimates.
Baker widened his annual loss estimate to $1.22 a share, from 82 cents. The other analysts with such changes were Hunter Keay of Stifel Nicolaus & Co. to a $1.22 loss, from $1.08; McAdoo to a loss of $1.20, from 91 cents; Higgins to a $1.50 loss, from 72 cents; and Helane Becker of Dahlman Rose & Co. to a loss of $1.65, from $1.53.
Engel, who rates AMR “underperform,” narrowed his full-year loss estimate to $1.44 a share, from $1.77.
Higgins narrowed his third-quarter profit estimate to 33 cents, from 74 cents, while McAdoo trimmed his to 28 cents, from 53 cents, and Baker cut his to 31 cents, from 65 cents. Engel raised his earnings estimate for the quarter to 40 cents, from 20 cents, and Becker increased hers to 26 cents, from 21 cents.
McAdoo rates AMR shares “market outperform,” and Keay recommends buying them. Becker rates the stock a “hold.”