American Airlines (AAL) Cuts PRASM Guidance, Jim Cramer Weighs In

NEW YORK (TheStreet) -- Shares of American Airlines Group Inc  (AAL) were higher by 0.38% to $40.01 in afternoon trading Tuesday, reversing its losses from earlier in the session when it cut its guidance for second-quarter unit revenue and pretax margins.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "I will tell you that if the bulls win and AAL/UAL pull the others up, you have some leadership away from the fins, and that may be all the bulls need to snap down this streak in its tracks."

American, the largest U.S. airline by traffic, said its second-quarter passenger revenue per available seat mile will decline between 6% to 8%, adding to concerns about profitability in the sector.

PRASM is an important measure of performance for the airline industry.

The company lowered its guidance from its previous forecast of a 4% to 6% drop.

The carrier also lowered its pretax margin estimates by one percentage point, to between 16% to 18% for the second quarter.

Last week, peer Delta Air Lines (DAL) said second-quarter revenue based on the same measurement as American's forecast will drop by 4% to 5%, compared to its earlier projection for a decrease of between 2% to 4%. 

American Airlines provides scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe and Asia.

The company is based in Fort Worth, Texas.

Insight from TheStreet's Research Team:

Jim Cramer commented on American Airlines in a recent post on RealMoney.com. Here is what Cramer had to say about the stock:

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