Here's Why Airline Stocks (AAL, UAL, DAL) Are Slumping Today

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Shares of several major airline stocks moved sharply lower in morning trading Wednesday after domestic giant American Airlines AAL lowered its unit revenue and unit cost guidance for the second quarter.

American said it expects unit revenue-the ever-important total revenue per available seat mile (TRASM) metric-to improve 1% to 3%, down from its previous guidance of 1.5% to 3.5% growth. This would still mark American's seventh consecutive quarter of TRASM growth, but the company cited lower-than-anticipated domestic yields as the reason for its lowered guidance.

Meanwhile, American lowered its outlook for Q2 capacity to 72.9 billion available seat miles from 73.1 billion and increased its estimate for average fuel prices to $2.24 - $2.29 per gallon from $2.18 - $2.23 per gallon.

American also said that a technology issue which resulted in one of its regional carriers, PSA Airlines, cancelling about 3,000 flights last month would reduce pre-tax income by about $35 million.

Shares of American Airlines were down more than 6% to touch an intraday low of $36.59 in early morning trading Wednesday. Elsewhere, "Big Three" rivals Delta DAL and United UAL were both more than 3% lower.

Budget airlines and regional carriers were also affected by the industry-wide slump. Alaska ALK dropped as much as 5%, Southwest LUV tumbled about 2%, and Spirit SAVE was down roughly 4%.

Overall, the U.S. Global Jets ETF JETS slumped about 2% in morning trading.

The airline industry continues to struggle in the face of rising fuel and labor costs, shifting trends, and global economic uncertainty. Nevertheless, investors will hope that some carriers can report strong summer travel results and help motivate a rebound.

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Southwest Airlines Co. (LUV): Free Stock Analysis Report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

United Continental Holdings, Inc. (UAL): Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

US GLOBAL JETS (JETS): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Symbols: LUV , DAL , UAL , SAVE , AAL

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