What Happened?
Shares of global airline American Airlines (NASDAQ:AAL) fell 9.2% in the morning session after the company reported weak fourth-quarter results, with full-year EPS guidance missing Wall Street's estimates due to surging fuel costs and margin pressures from new labor agreements. Management also adopted a cautious stance on capacity expansion, which isn't helping the growth story. On the other hand, AAL beat analysts' revenue passenger miles (a key volume metric) expectations this quarter, which led to a revenue beat. EPS also outperformed. However, with markets more forward-looking, the weak outlook seems to be weighing on shares.
The shares closed the day at $17.03, down 8.8% from previous close.
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What The Market Is Telling Us
American Airlines’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Investors who bought $1,000 worth of American Airlines’s shares 5 years ago would now be looking at an investment worth $590.28.
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