MW American Airlines reports big profit beat and best load factor in 11 years

By Tomi Kilgore

Profit outlook was raised 3 months after a big warning, but stock pulls a premarket U-turn to trade lower

American Airlines Group Inc. reported third-quarter profit that beat expectations and raised its full-year outlook, as load factor rose to the highest level seen in more than 10 years.

The results were in stark contrast to the previous quarter's report, in which the air carrier issued a big full-year profit warning, citing challenges resulting from excess industry capacity, but also some self-inflicted wounds, including actions that alienated travel agencies.

"We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community, which we're confident will improve our revenue performance over time," said Chief Executive Robert Isom.

The stock $(AAL)$ initially rallied after the results were released, to a premarket gain of as much as 8.2%, but then pulled a sharp U-turn to fall 2.3% in recent trading.

Net losses for the quarter to Sept. 30 narrowed to $149 million, or 23 cents a share, from $545 million, or 83 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share slipped to 30 cents from 38 cents and were well above the FactSet EPS consensus of 16 cents.

Revenue grew 1.2% to $13.65 billion, above the FactSet consensus of $13.50 billion, as passenger revenue rose 0.8% to $12.52 billion, cargo revenue increased 5% to $202 million and "other" revenue climbed 6% to $922 million.

"The American Airlines team demonstrated its continued resilience in the third quarter by quickly recovering from several irregular operations events, most notably the CrowdStrike outage and Hurricanes Debby and Helene," the company said.

Despite those events, American said it achieved the highest completion factor among its U.S. network carrier peers.

Load factor increased to 86.6% from 84.0%, to reach the highest level since the merger with American and US Airways in 2013.

That beat the FactSet load-factor consensus of 84.2%, as traffic increased 7.1% to 43.11 billion revenue passenger miles while capacity growth was much less, up 3.9% to 50.04 billion available seat miles. The beat was by the widest margin since the third quarter of 2020.

Looking ahead, the company raised its guidance range for full-year adjusted EPS to between $1.35 and $1.60 from a previously lowered range of between 70 cents and $1.30.

The stock has lost 6.6% year to date through Wednesday, while the U.S. Global Jets ETF (JETS) has rallied 19% and the S&P 500 index has climbed 21.5%.

-Tomi Kilgore

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October 24, 2024 08:36 ET (12:36 GMT)

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