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Investing.com - American Airlines Group (NASDAQ:AAL) has posted a slide in second-quarter profit and warned that it expects to post a third-quarter loss, as the carrier grapples with an uncertain economic backdrop that has threatened to weigh on travel demand.
Worries that sweeping U.S. tariffs could drive up inflation, weigh on growth and lead cost-conscious travellers to rein in spending on air fares have clouded over the outlook for U.S. airlines this year.
However, like its peers Delta and United, American has seen signs of green shoots, with operating revenues inching up 0.4% versus a year ago to $14.39 billion. Analysts had anticipated $14.3 billion in sales.
A rebound in leisure travel was faster than anticipated, while -- just as it was with other industry players -- premium cabin demand was solid, especially to long-haul destinations, American said.
Adjusted net income declined by 19% year-over-year to $628 million, compared with estimates of $507.5 million, as American dealt with disruptions from inclement weather at its major hubs in Dallas, Chicago, Washington, D.C., and the Northeast. Overall expenses also rose by 2.4% to $13.26 billion due in part to higher wage costs.
American flagged that, "based on its current booked revenue" and expectations for future travel activity and fuel prices, and excluding the impact of one-off items, it expects to report a third-quarter adjusted loss per diluted share of between $0.10 to $0.60.
The full-year figure is seen at between a loss of $0.20 a share to a profit of $0.80 per share, American added, noting that it believes "the top end of this range is achievable if demand in the domestic market continues strengthen." On the other hand, it could be at the bottom of the estimate "if there were to be macro weaknesses that are not seen today."
In the second quarter, the firm posted positive income per share of $0.95, down from $1.09 a year prior but above projections of $0.75.
Shares in American slipped by more than 4% in premarket U.S. trading on Thursday.