American Airlines to take $400m hit from Boeing 737 Max groundings
American Airlines shares dropped today after it said the Boeing 737 Max groundings would likely dent its 2019 pre-tax earnings by around $400m (£320m).
Read more: Boeing loses $3.4bn on 737 Max groundings in second quarter
Yet in its second quarter results, released today, the world’s biggest airline said its revenue grew by 2.7 per cent year on year to $12bn thanks to stronger passenger demand.
American said costs had been driven up by lower capacity due to the 737 Max grounding as well as a dispute with its mechanics’ union leading to a work slowdown.
Boeing’s latest 737s, launched in 2016, have been grounded by authorities since March following two fatal crashes, causing havoc in the aviation industry.
Despite these problems, American’s net income climbed 19 per cent compared to a year earlier to $662m. This took its adjusted earnings per share to $1.82, above economists’ expectations of $1.79.
The airline said it now expects its adjusted earnings per share for 2019 to between $4.50 and $6, up from the previous prediction of $4 to $6.
American said it has taken all planned 737 Max flights off its schedule until 2 November, two months longer than originally planned. It currently has 24 Max aircraft and another 76 ordered.
The US airline’s shares had fallen 3.8 per cent by 5pm UK time to $33.29.
“Our team members did a tremendous job to deliver solid results despite a challenging start to our summer,” said chairman and chief executive Doug Parker.
“Their extraordinary efforts led to an increase in earnings and record revenue performance.”
Read more: American Airlines picks up 50 airbus A321XLR models
“These strong results in the face of near-term adversity, coupled with our ongoing initiatives, give us great confidence in the future of American Airlines.”
(Image credit: Getty)