The extended grounding of Boeing Company (NYSE: BA) 737 MAX jets drove American Airlines Group, Inc. (NASDAQ: AAL) to cut its revenue guidance for the first quarter on Tuesday.
American Airlines Group Inc. $33.83
The Company said first quarter revenue per seat mile, a major industry performance measure, is expected to be flat to up to 1% compared to its previous guidance of flat to up to 2%. American Airlines also expects to pay an average of between USD 2.02 and USD 2.07 per gallon of mainline jet fuel, compared to previous estimates of USD 1.97 to USD 2.02.
The Company struggled with unexpected flight cancellations in the month of March. American Airlines announced the removal of 14 737-800 aircraft for unplanned remediation work, resulting in around 940 cancellations. The airline said work has been completed on three of the aircraft, and the remainder are expected to return to service throughout April.
Following the crash of Ethiopian Airlines Flight 302 over Addis Ababa on March 10, American Airlines again faced sudden cancellations. The Company cancelled approximately 1,200 flights in the first quarter after the Federal Aviation Administration (FAA) directed the grounding of all U.S.-registered Boeing 737 MAX aircraft.
Many airlines continue to wait for information from the FAA and other regulatory authorities that would allow Boeing 737 MAX aircraft to resume flying. In an effort to avoid any last-minute problems, American Airlines on Sunday announced extended cancellations through June 5. About 90 flights will be impacted each day as a result. The Company said it is unable to forecast the financial costs of this disruption.
These proves to be a bad news for the firm as the firm was expected the results to come positive regardless of some of the unfortunate events that took place, but apparently it didn’t work as they thought it would be.