KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
American Airlines Group Inc cut its earnings outlook as it works to recover from earlier blunders that will impact revenue and profits for the rest of 2024.
Key Takeaways:
- Earnings Outlook: Adjusted full-year profit is projected to be between 70 cents and US$1.30 per share, significantly lower than the previous outlook of up to US$3.25 per share. The airline also expects to break even in the third quarter, far below the 49-cent per share profit expected by analysts.
- Strategic Missteps: The lowered outlook, American’s second reduction this year, reflects the fallout from overly optimistic expectations for domestic demand and a misguided sales strategy that alienated corporate clients.
- Revenue Impact: The shift and loss of corporate business are expected to reduce American’s revenue by about US$1.5 billion this year, according to CEO Robert Isom.
- Corporate Feedback: “I’ve talked to dozens of CEOs, asking them to give me the straight scoop on how you perceive us,” Isom said in an interview with CNBC. “I wasn’t pleased. They told us, ‘You didn’t support us, you moved too fast on technology, you left us behind.’”
- Steps to Recovery: American is working aggressively to rebuild ties with corporate customers and travel management companies, ensuring they have full access to the airline’s flight schedules and fares. The airline has created a dedicated help desk for business customers and added new account managers after decimating its corporate sales staff last year.
- Future Expectations: Isom expects benefits from new agreements with travel management companies in the coming months, though restoring relationships with corporations may take longer.
- Market Response: Despite the lowered outlook, American’s shares rose 1.8% at 9:55 am as Isom detailed steps to turn operations around.
- Industry Challenges: American and other carriers face pressure from cut-rate ticket prices, delayed deliveries of new planes, and rising labor costs. American’s aggressive discounting could further erode its second-half results.
- Second-Quarter Results: American’s 2Q adjusted profit was US$1.09 per share, exceeding the US$1.05 average analyst estimate. Revenue of US$14.3 billion met expectations.
American Airlines' efforts to rectify its strategic missteps and rebuild corporate relationships are crucial as it navigates the challenging industry landscape.
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