A year ago, American Airlines' (NASDAQ: AAL) management predicted that the company's adjusted earnings per share would rise to between $5.50 and $7.50 in 2019. It was an aggressive forecast, considering that adjusted EPS totaled just $4.55 in 2018. However, with fuel prices having fallen significantly in the last few months of 2018 and various other margin improvement drivers scheduled to ramp up during 2019, the guidance wasn't totally unrealistic, either.
Unfortunately, the grounding of Boeing's (NYSE: BA) 737 MAX beginning last March dashed all hope of achieving the 2019 earnings target. Moreover, with the 737 MAX now likely to stay grounded for most of 2020, American Airlines' management doesn't expect meaningful margin improvement or EPS growth this year.
When the Boeing 737 MAX was grounded last March, airlines initially thought it would be cleared to resume service within a few months, prior to the busy summer season. That optimistic view didn't last long. As of late April, when American Airlines held its Q1 2019 earnings call, the airline had removed the 737 MAX from its schedule through Aug. 19. Still, management expressed confidence (based on conversations with Boeing and the FAA) that the troubled jet would be recertified well before that date.