(Reuters) – American Airlines cut its annual profit forecast on Thursday as uneven demand trends and overcapacity in certain markets dampened the carrier’s pricing power.
A rush among carriers to cash in on strong summer travel demand has forced airlines to offer tickets at a discount to fill their planes.
Analysts have flagged concerns with American’s aggressive discounting this summer, while the carrier has also distanced itself from high-margin corporate travel customers in an attempt to grow its share in smaller markets.
The Fort Worth, Texas-based carrier had trimmed its second-quarter profit forecast in May, citing pressure on its pricing power.
The company now expects an adjusted profit between $0.70 per share and $1.30 per share, compared with its previous forecast of $2.25 to $3.25 per share.
“American’s network leaves it more exposed to the markets currently most oversupplied and less able to offset the higher cost environment,” TD Cowen analyst Thomas Fitzgerald said in a note earlier this month.
American Airlines reported a profit of $717 million, or $1.01 per share, compared with $1.34 billion, or $1.88 per share, a year earlier.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Pooja Desai)
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