American Airlines skidded more than 5% Thursday after the nation's largest airline said it took a hit from the prolonged grounding of the Boeing 737 Max.
Strong travel demand helped it post second-quarter profit that came in slightly higher than expected.
American reported a per-share profit of $1.82 on an adjusted basis, compared with the $1.80 analysts had expected. The Fort Worth, Texas-based airline raised its profit outlook for the year to a range of $4.50 to $6 a share from $4 to $6.
Revenue was roughly in line with estimates at $11.96 billion in the three months ended June 30, and up nearly 3% from a year ago. Net income rose nearly 19% from the previous year to $662 million.
The airline canceled thousands of flights in the quarter because of the 737 Max grounding, which dented its pretax income by about $175 million. American has 24 Max planes in its fleet of more than 900 aircraft and 76 are on order. American earlier this month took the planes out of its schedule through Nov. 2. On Thursday, it said the grounding would hit its pretax earnings this year by $400 million.
The airline has been battling a rash of delayed and canceled flights. American also said the union representing its mechanics, with which it is in the middle of contract negotiations, engaged in an "illegal work slowdown" that disrupted operations, allegations the union has denied.
"All of those successes do not negate the fact that we have to fix the operation — that's a must for our frontline team who is bearing the brunt of this pain and for our customers," American's CEO Doug Parker and its president, Robert Isom, wrote to employees announcing the company's results.
