American Airlines Group, Inc. (NASDAQ:AAL) shares are trading lower on Tuesday after the company revised its first-quarter financial outlook.

The updated guidance reflects weaker-than-expected revenue, largely due to challenges from Flight 5342 and a downturn in the domestic leisure segment, particularly in March.

The airline now projects its total revenue for the first quarter to be flat compared to the first quarter of 2024.

Previously, the company had expected a 3% to 5% growth in revenue.

The company also anticipates an adjusted loss per diluted share between $0.60 to $0.80, a notable revision from the previous loss forecast range of $0.20 to $0.40. The analyst consensus estimate pegs at a $0.25 loss.

Additionally, American Airlines estimates that Available Seat Miles will remain flat to down 2% year-over-year.

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The company's weakened forecast comes amid broader concerns in the airline industry.

Earlier this month, JP Morgan analyst Jamie Baker noted a shift in investor sentiment regarding North American airlines, citing worries over domestic capacity, changing consumer behavior, and reduced government travel.

As a result, share price momentum in 2025 has slowed significantly compared to the rapid gains in late 2024.

Yesterday, Delta Air Lines also downgraded its revenue growth forecast for the March quarter, now expecting a 3% to 4% growth, down from the previous estimate of 7% to 9%.

On a positive note, Southwest Airlines has seen its shares rise, fueled by announcements of initiatives aimed at accelerating EBIT contribution and stock buyback program.

As airlines navigate a period of uncertainty, all eyes are on how the sector adjusts to these new challenges.

Price Action: AAL stock is down 6.8% at $11.65 at last check Tuesday.

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