American Airlines Shares Drop—Is CCO Departure to Blame?
By Giuliano De Leon
May 29, 2024 12:14 PM EDT
May 29, 2024 12:14 PM EDT
American Airlines' shares drastically dropped after the airline announced its sales strategies and the departure of its Chief Commercial Officer, Vasu Raja.
(Photo : Bruce Bennett/Getty Images)
According to CNBC's latest report, American Airlines' shares dropped 15% on Wednesday, May 29. Experts said this is because investors are weighing AA's missteps. Some analysts also questioned the airline company, asking how the carrier can capitalize on what competitors expect to be a record summer.
The sudden share decrease happened while American Airlines was weighing changes to its CCO's plan to drive direct bookings at the airline instead of leaving them to third-party websites and travel agencies.
However, travel agencies are disappointed and angry about these changes since they couldn't access some of AA's fares. These adjustments make it harder for them to sell tickets on American Airlines flights.
Investopedia reported that American Airlines made adjustments in its capacity growth in 2024. AA officials said it now sees its second-quarter unit revenue dropping between 5% and 6%.
This is down from roughly 8% YoY growth in the first six months of 2024. American Airlines also trimmed its bottom-line guidance for the period. The travel company said it expects adjusted revenue to range between $1 and $1.15 per share.
This is lower than its previous projection of $1.15 to $1.45 per share. Because of this, analysts are calling for adjusted earnings of $1.30 per share instead.
Many experts and analysts were surprised by all these sales strategies. But the most notable one is American Airlines' decision to allow Vasu Raja to depart the company. AA announced on Tuesday, May 28, that its CCO will be resigning from his position.
He will be temporarily replaced by Vice Chair and Chief Strategy Officer Stephen Johnson. Experts said these sales strategy adjustments caused American Airlines' shares to drop significantly.
Related Article: US Airlines Call for Government's Swift Action to Address Air Traffic Controller Shortage; FAA Strikes Back
© 2024 VCPOST, All rights reserved. Do not reproduce without permission.
Join the Conversation