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American Airways beats fourth-quarter revenue expectations as increased fares buoy income

Staff of American Airways assist verify in passengers at Ronald Reagan Washington Nationwide Airport on January 11, 2023 in Arlington, Virginia.

Alex Wong | Getty Photographs

American Airways‘ fourth-quarter revenue beat analysts’ expectations as sturdy journey demand and excessive fares buoyed outcomes throughout a turbulent vacation season.

Shares of American have been down 2%, buying and selling at round $16 on Thursday.

Here is how American Airways carried out within the fourth quarter in contrast with what Wall Avenue anticipated, based mostly on a median of analysts’ estimates compiled by Refinitiv:

  • Adjusted earnings per share: $1.17 versus an anticipated $1.14
  • Complete income: $13.19 billion versus anticipated $13.20 billion

For the three months ended Dec. 31, the corporate reported web earnings of $803 million, or $1.14 per share, unadjusted — a stark enchancment from a lack of $931 million, or $1.44 per share, throughout the identical interval a yr earlier.

Quarterly income of $13.19 billion was up 16.6% from the identical interval in 2019, earlier than the Covid pandemic stymied journey. American earlier this month raised its income and revenue estimates for its fourth quarter.

American raked in that file fourth-quarter income regardless of working 6.1% much less capability, suggesting flyers maintain paying up for seats.

For the complete yr, American reported $127 million in web earnings. It was the primary full-year revenue for the service since 2019, CEO Robert Isom mentioned in a message to workers Thursday morning.

The corporate paid a median of $3.50 per gallon of gasoline within the fourth quarter, up 48% from final yr. It expects that price to return all the way down to someplace between $3.33 and $3.38 per gallon because it heads into its first quarter of 2023.

Primarily based on these price estimates and the place demand goes, American mentioned it expects capability to be 8% to 10% increased than the primary quarter of 2022 and tasks that it’s going to break even on earnings per share.

Airline executives at Delta and United have been equally upbeat about 2023 bookings regardless of issues about layoffs at main U.S. firms and financial weak spot.

American and different airways have pointed to capability constraints tied to plane shortages and the pilot shortfall, significantly for regional airways, components which have saved airfares excessive.

Isom mentioned through the firm’s earnings name that mainline pilot constraints ought to ease this yr however regional pilot shortfalls ought to final a number of extra years. American mentioned it plans to rent 2,000 pilots for its mainline operation this yr.

The Fort Price, Texas-based airline mentioned its unit prices will probably be flat or down as a lot as 3% within the first quarter in contrast with a yr earlier, and up as a lot as 5% for the complete yr over 2022.

The total-year forecast consists of new labor contracts, although the service hasn’t but reached preliminary agreements with pilots and flight attendants.

Of the largest U.S. carriers, solely Delta has a preliminary settlement with its aviators.

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