On Thursday, Susquehanna adjusted its outlook on American Airlines (NASDAQ: NASDAQ:AAL) shares, reducing the price target to $13 from the previous $15 while maintaining a Neutral rating on the stock.
The decision followed an update from the airline that second-quarter total revenue per available seat mile (TRASM) is anticipated to decline by approximately 5-6% year-over-year, which is around 350 basis points below the midpoint of the prior guidance.
The analyst identified the TRASM revision as a potential execution issue, especially in light of United Airlines (NASDAQ:UAL)' recent comments about continuing healthy demand.
The departure of Chief Commercial Officer Vasu Raja, a veteran of roughly two decades at American Airlines, was noted as a critical gap that the airline needs to fill promptly. This change comes at a time when competitors Delta and United are benefiting from their network strategies.
The report highlighted that American Airlines needs to swiftly address this leadership void and more effectively communicate and implement a commercial strategy.
The current plan is not meeting the expectations of customers and investors, as evidenced by the negative response to the airline's second-quarter update released after the market closed on Tuesday.
Following this update, Susquehanna has revised its financial forecasts for American Airlines for the fiscal years 2024 and 2025. The adjustments reflect the latest operational and strategic challenges the company faces as it aims to navigate a competitive industry landscape.
The revised price target of $13 signifies a more cautious stance on the airline's stock, suggesting that investors may want to temper their expectations for the company's near-term financial performance.
American Airlines, like its industry peers, is grappling with various operational dynamics that influence its market position and financial health.
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