FMP
May 29, 2024 12:24 PM - Davit Kirakosyan
On Tuesday, American Airlines (NASDAQ:AAL) revised its second-quarter profit forecast downward due to weaker pricing power, causing its shares to drop about 7% in pre-market today.
The airline announced that Chief Commercial Officer Vasu Raja, who has been leading the new business strategy, will depart in June. American Airlines now anticipates second-quarter adjusted earnings between $1.00 and $1.15 per share, down from the previous forecast of $1.15 to $1.45 per share. The company also expects total revenue per available seat mile, an indicator of pricing power, to decline by 5% to 6% compared to a year ago, worse than the earlier projection of a 1% to 3% decrease.
Analysts have expressed doubts about American's strategy to differentiate itself from competitors. The airline has moved away from targeting corporate travel customers and is focusing on expanding its market share in smaller markets. Some analysts are skeptical that this approach will generate enough revenue to compete effectively with United and Delta Air Lines.
In the first quarter, American's business revenue increased by high-single digits year-over-year, compared to double-digit growth at Delta and United. Additionally, American's seat growth in the domestic market remains high, which analysts say is negatively impacting its pricing power.
Oct 31, 2023 8:03 AM - Parth Sanghvi
Free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) are two of the most important metrics used in financial modeling. Both metrics measure the amount of cash that is available to a company's shareholders and creditors, but there is a key difference between the two. FCFF measures...
Nov 25, 2023 6:39 AM - Parth Sanghvi
Choosing the Right Valuation Method: DCF vs. Comparable Companies Analysis Introduction: Valuation methods play a pivotal role in determining the fair value of a company, aiding investors in making informed investment decisions. Two commonly used methods, DCF Valuation and Comparable Companies A...
Dec 23, 2023 2:19 AM - Parth Sanghvi
Introduction: Discounted Cash Flow (DCF) analysis stands as a cornerstone in valuing investments, yet its efficacy is contingent upon various assumptions and methodologies. While a powerful tool, DCF analysis comes with inherent limitations and challenges that investors must acknowledge to make i...