American Airlines shares lifted by revenue silver lining

American Airlines (NASDAQ:AAL) saw its shares ascend, rising more than 6% as the trading day progressed, after it reported ‘record’ revenue for its second quarter, at $14.33 billion.

That was up 2% year-over-year, but short of consensus market expectations $14.36 billion.

Investors evidently found some silver lining and confidence, because at the same time the airline also today downgraded its full year outlook – with its full-year profit forecast dropping significantly, to between $0.70 and $1.30 per share, from $2.25 to $3.25 per share.

It pointed to a failed sales and distribution strategy, that aimed to push volume with cheaper fares rather than prioritise premium-priced business travelers. It resulted in diminished per-seat income and lower-than-expected corporate travel revenue.

Chief executive Robert Isom acknowledged the shortcomings and noted steps to reorient the airline’s approach – this will including the renegotiation of some corporate customers and travel agencies.

“We did not perform to our initial expectations due to our prior sales and distribution strategy and an imbalance of domestic supply and demand,” Isom said in a statement.

“We are taking this challenge head-on, with clear and decisive actions to deliver on a strategy that maximizes our revenue and profitability, and importantly, one that makes it easy for customers to do business with American.”

AAL shares opened down by more than 5%, and traded as low as $9.78 after the bell, before rallying through morning trade.

At $10.75, the stock was up 56 cents or 5.56% for the trading session.