American Airlines shares tumble to a 2-year low

Key Points
  • American Airlines' shares are down more than 35 percent this year, more than any other U.S. airline.
  • American is the world's largest airline.
  • U.S. airline stocks have largely struggled this year compared with the broader market due to an increase in fuel prices.
Airline stock earnings could be impacted by rising oil prices

Shares of American Airlines plunged more than 6 percent to a more than two-year low on Tuesday, after the carrier said its fuel costs were higher than it previously expected in the last quarter, and it detailed the impact from Hurricane Florence last month.

American shares fell to $33.55, its lowest closing price since August 2016, according to FactSet. The company's stock is down more than 35 percent so far this year, more than any other U.S. airline, ramping up pressure on CEO Doug Parker to persuade investors that the carrier can grow profits, even as fuel prices climb.

The airline will report third-quarter earnings later this month. Analysts polled by Thomson Reuters expect the carrier to post a per-share profit of $1.21, down close to 15 percent from the year-earlier period.

In an investor update released Tuesday morning, American said Hurricane Florence last month cost it $55 million in revenue in the quarter ended Sept. 30, after it canceled about 2,100 flights. The airline raised its estimated fuel cost in the last quarter from $2.28 to $2.33, up from its July forecast of $2.22 to $2.27.

American, however, raised its estimated increase in revenue per seat mile, a key industry metric, for the third quarter to 2 to 3 percent, up from forecast growth of 1 percent to 3 percent.

U.S. airline stocks have largely struggled this year amid a profit-crimping rise in fuel, generally airlines' second-largest expense after employee salaries. The sole outlier is United Airlines, whose stock is up nearly 21 percent this year. Shares of Delta Air Lines, which will report third-quarter earnings on Thursday, are down more than 9 percent this year.

Airline shares were down broadly on Tuesday. United and Delta each shed more than 2 percent. Southwest Airlines shares ended the day down close to 2 percent, while Alaska Airlines fell more than 4 percent.