American Airlines cut its 2019 profit forecast, citing the Boeing 737 MAX grounding, along with higher oil prices (Jason Redmond)

New York (AFP) – American Airlines will take a $350 million hit due to the grounding of Boeing 737 MAX aircraft  and faces $650 million in higher fuel costs, prompting the company to slash its 2019 profit forecast Friday.

The US carrier, which has canceled flights on the Boeing plane through August 19, said it now expects profits this year of $4.00 to $6.00 a share, down from the prior range of $5.50 to $7.50.

“As we progress toward the busy summer travel period, demand for our product remains strong,” Chief Executive Doug Parker said in a press release.

“However, our near-term earnings forecast has been affected by the grounding of our Boeing 737 MAX fleet,” along with much higher oil prices “than we forecast just three months ago,” Parker added.

The airline said net income for the first quarter was $185 million, up 16.4 percent from the same period of the prior year, while revenues rose 1.8 percent to $10.6 billion.

American canceled about 1,200 flights in the first quarter after authorities worldwide grounded the 737 MAX in mid-March in the wake of the crash of an Ethiopian Airlines plane, the second deadly crash in five months.

American has 24 of the MAX planes in its portfolio, about two percent of the carrier’s capacity in the summer, it said.

“Although these aircraft represent a small portion of the company’s total fleet, its financial impact is disproportionate as most of the revenue from the cancellations is lost while the vast majority of the costs remain in place,” American said.

Shares in the airline fell 2.9 percent to $32.44 in pre-market trading.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.