Shares of American Airlines Group Inc. dropped toward a four-month low Wednesday after the air carrier cut its third-quarter earnings outlook, citing higher fuel prices and costs associated with a new labor agreement. The company said it now expects adjusted earnings per share of approximately 20 cents to 30 cents, down from previous guidance of about 85 cents to 95 cents. The FactSet EPS consensus is 69 cents.
The stock
AAL,
-4.04%
fell 3.8% in morning trading, enough to make it the second-worst performer in the S&P 500
SPX
and to put it on track for the lowest close since May 4. Meanwhile, the U.S. Global Jets exchange-traded fund
JETS
shed 2.2% toward the lowest close since May 24. American said the ratification of a new collective-bargaining agreement with its pilots, who are represented by the Allied Pilots Association union, resulted in a retroactive-pay expense of about $230 million. That expense, which will be recorded in the third quarter, lowered the adjusted EPS outlook by 23 cents. “The remainder of the adjustment to the company’s updated outlook is driven by higher fuel prices in the quarter,” the company said. The guidance range for the average fuel price per gallon was raised to $2.90 to $3 from $2.55 to $2.65. That follows raised …
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