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Retail sentiment soured for Southwest Airlines and American Airlines after the firms reported their quarterly earnings. Let’s take a look at what did not work for the airlines this time.1. Southwest Airlines: The firm reported a 46.3% decline in its second quarter net income at $367 million while stating that it is taking urgent and deliberate steps to mitigate near-term revenue challenges and implement longer-term transformational initiatives. Operating revenue came in at a record $7.35 billion, in line with the Street estimate while earnings per share (EPS) came in at $0.58, higher than an estimate of $0.52.Meanwhile, the revenue per available seat mile (RASM) decreased 3.8% year-over-year (YoY). Following the results announcement, shares of the firm fell over 6% in Thursday’s pre-market session but stabilized during market open. Retail sentiment soured following the significant decline in profits with the sentiment meter trending in the bearish territory (38/100) supported by high message volume. What is noteworthy is the fact that the firm’s third quarter forecast has not done anything to alleviate the negative sentiment. Southwest Airlines said it expects third quarter unit revenue to be in the range of flat to down 2% on a year-over-year (YoY) basis with capacity up roughly 2% YoY.<figure class="image"><img style="aspect-ratio:1564/464;" src="https://st-everywhere-cms-prod.s3.us-east-1.amazonaws.com/Screenshot_2024_07_25_at_9_28_29_AM_243f946dbb.png" alt="Retail sentiment in bearish territory for Southwest Airlines" width="1564" height="464"><figcaption>Retail sentiment trends in bearish territory for Southwest Airlines</figcaption></figure>2. American Airlines: Shares of the airline fell over 3% in Thursday’s pre-market trading after the firm said it expects full-year adjusted earnings per share to come in between $0.70 and $1.30, which is lower than the forecast of $2.25 to $3.25 a share made in April. The latest guidance stands below a Street estimate of $1.10 to $2.60.“American has taken aggressive action to improve its revenue performance, however, the company’s previous sales and distribution strategy will continue to impact its revenue performance and earnings through the remainder of the year,” the firm said. Following the announcement, retail sentiment was trending in the bearish territory for the stock (29/100) supported by extremely high message volumes.Meanwhile, the airline reported an adjusted earnings per share of $1.09 compared to a Street estimate of $1.06. The firm reported a record quarterly revenue of $14.33 billion as compared to a Street estimate of $14.4 billion.American Airlines clarified that the firm has taken swift and aggressive action to reorient its sales and distribution strategy in ways that continue to be customer-centric, while addressing feedback from corporate and agency partners. Earlier, the airline’s plan to push for more direct sales instead of third-party bookings had reportedly angered many travel agencies.<figure class="image"><img style="aspect-ratio:1602/468;" src="https://st-everywhere-cms-prod.s3.us-east-1.amazonaws.com/Screenshot_2024_07_25_at_9_29_57_AM_93b5e9a1d9.png" alt="Retail sentiment trends in bearish territory for American Airlines" width="1602" height="468"><figcaption>Retail sentiment trends in bearish territory for American Airlines</figcaption></figure>Photo Courtesy: Forsaken Films on Unsplash

Wall Street Is Unhappy With Southwest Airlines, American Airlines After Q2 Earnings: But What’s Retail Thinking?

Retail sentiment soured for Southwest Airlines and American Airlines after the firms reported their quarterly earnings. Let’s take a look at what did not work for the airlines this time.

Southwest Airlines, American Airlines Disappoint Wall Street After Q2 Earnings

Equity

Retail sentiment was trending in the bearish territory for both companies after they reported second-quarter earnings. While Southwest reported a significant decline in net income, American Airlines came out with a disappointing forecast.

Shares of United Airlines were trading over 1% higher on Thursday after the firm reported an upbeat set of earnings for the second quarter. The firm announced earnings per share of $4.14 compared to a Street estimate of $3.93. Revenue came in at $14.99 billion, slightly lower than an estimate of $15.06 billion. Retail sentiment brightened for the stock with the sentiment meter traveling deep into extremely bullish territory (84/100) supported by a one-year high in message volumes.<figure class="image"><img style="aspect-ratio:778/230;" src="https://st-everywhere-cms-prod.s3.us-east-1.amazonaws.com/Screenshot_2024_07_18_at_2_09_57_PM_6684c62f70.png" alt="Retail sentiment trends in extremely bullish territory for United Airlines" width="778" height="230"><figcaption>Retail sentiment trends in extremely bullish territory for United Airlines</figcaption></figure>United said its premium revenue grew 8.50% in the second quarter versus the same quarter last year, while the Basic Economy revenue grew 38% year-over-year (YoY).The airline witnessed a 27.20% YoY rise in its operating income during the quarter to $1.93 billion. Meanwhile, net income rose 23.10% YoY to $1.32 billion. The company reiterated expectations of full-year 2024 adjusted diluted earnings per share of $9-$11.United Airlines CEO Scott Kirby said multiple airlines have begun to cancel loss-making capacity, and the firm expects leading unit revenue performance among our largest peers in the second half of the third quarter. “United has long been preparing for the moment when industry-wide domestic capacity would adjust - it's now clear that the inflection point is just 30 days away,” he said.The airline has reduced its debt by voluntarily prepaying the remaining $1.80 billion outstanding balance of the MileagePlus term loan with a nearly 11% interest rate during July.Meanwhile, TD Cowen has increased the price target on the airline stock to $80 from $65. The firm has a ‘Buy’ rating on the stock. Given that United Airlines is currently trading near the $47 mark, the new price target leaves a potential upside of 41%.A Stocktwits user named ‘Thelonetrader’ expressed optimism about the stock, saying it could reach $60 per share.<figure class="image"><a href="https://stocktwits.com/Thelonetrader/message/579867971"><img style="aspect-ratio:788/210;" src="https://st-everywhere-cms-prod.s3.us-east-1.amazonaws.com/Screenshot_2024_07_18_at_2_11_22_PM_e64870909a.png" alt="Stocktwits user Thelonetrader's post on United Airlines" width="788" height="210"></a><figcaption>Stocktwits user Thelonetrader's post on United Airlines</figcaption></figure>

United Airlines Topped Analyst Estimates On Earnings, Pushes Retail Sentiment Deeper Into Extremely Bullish Territory

United Airlines announced earnings per share of $4.14 compared to a Street estimate of $3.93. Retail sentiment brightened for the stock with the sentiment meter traveling deep into the extremely bullish territory.

United Airlines announced earnings per share of $4.14 compared to a Street estimate of $3.93. Retail sentiment brightened for the stock with the sentiment meter traveling deep into extremely bullish territory (84/100), supported by a one-year high in message volumes.

Volume	4,486.00
52-Wk High	$88.14
52-Wk Low	$66.75

XTN SPDR Series Trust - SPDR S&P Transportation ETF

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