AAL Stock YTD Price Performance
Reasons Behind the Lackluster Price Performance
High fuel costs have been the primary reason behind the AAL stock’s dismal performance. In fact, oil prices have increased roughly 10% on a year-to-date basis.
In the second quarter, high fuel costs are expected to limit bottom-line growth at American Airlines as was the case in first-quarter 2018. Average fuel price per gallon rose 23.6% year-over-year to $2.10-per-gallon in the first quarter. Fuel prices are anticipated to be even higher (between $2.18 and $2.23-per-gallon) in the second quarter.
Apart from high fuel costs, expenses pertaining to labor are expected to weigh on the bottom line in the second quarter. Consolidated cost per available seat miles (excluding special items and fuel) is anticipated to increase 3.5% in the second quarter of 2018.
American Airlines’ high debt levels are added concerns. Apart from AAL stock, the rise in oil prices has also hurt other airline operators like Southwest Airlines Co (NYSE:LUV), Delta Air Lines, Inc. (NYSE:DAL) and United Continental Holdings Inc (NYSE:UAL).
Other Unfavorable Readings
The Zacks Consensus Estimate for second-quarter and full-year 2018 earnings moved south 8.5% and 7.9%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.
Furthermore, the company’s Momentum Score of D highlights its short-term unattractiveness. Undoubtedly, the above negatives substantiate the company’s Zacks Rank #4 (Sell).
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