While U.S. equities remain in stasis ahead of Wednesday’s Federal Reserve policy announcement — with the Dow Jones Industrial Average parked just under the 18,000 level — a number of major industry groups are on the move.
One such industry is airlines, which are being hammered here on disappointing earnings results. The broad theme is disappointing revenue and increased competition. Headwinds include added industry capacity and lower fuel surcharges.
With that, a number of stocks are losing altitude fast. Here are three to watch.
Airliners Losing Altitude: American Airlines Group Inc (AAL)
American Airlines Group Inc (AAL) shares are on the decline after reporting a first-quarter earnings beat and a $2 billion share buyback program marred by in-line revenues and weak forward guidance.
On April 22, the company report earnings of $1.25 per share — six cents ahead of estimates — on a 4% year-over-year drop in sales to $9.44 billion.
But consolidated passenger revenue per average seat mile was 12.40 cents, down 7.5%. Moreover, management guided passenger revenue per available seat mile to down 7% to 8% from down 6% to 7% on April 11.
The company will next report results on July 22 before the bell. Analysts are looking for earnings of $1.63 per share on revenues of $10.3 billion.
Airliners Losing Altitude: Delta Airlines, Inc. (DAL)
Delta (DAL) initially moved higher after reporting an earnings beat on April 14, but then doubts about future guidance crept in.
Earnings came in at $1.32 per share on $9.25 billion in revenue, a 1.5% drop from last year. Passenger unit revenue fell 4.6% on dollar strength and increased capacity. Investors had been betting on a turnaround in Prasm on the anticipation of lower capacity.
But it’s slow in coming: Management guided Prasm down 3.5% for Q2. The company will next report results on July 20 before the bell. Analysts are looking for revenues of $1.85 per share on revenues of $10.6 billion.
Airliners Losing Altitude: United Continental Holdings Inc (UAL)
United Airlines (UAL) shares are being hit after lowering its passenger revenue guidance for the second quarter to down 6.8% to 8.5% vs. down 7.4% in Q1. Management noted that demand isn’t keeping pace with supply increases. This despite reporting better-than-expected earnings of $1.23 per share (vs. $1.18 expected) on in-line revenues.
Analysts at Cowen downgraded the stock on lower Prasm guidance and structural issues.
The company will report results next on July 21 before the bell. Analysts are looking for earnings of $2.52 per share on revenues of $9.37 billion.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
