Companies
American Airlines rises despite fuel costs forcing outlook cut
American Airlines shares rose on Thursday after quarterly results beat analyst forecasts. Higher fuel costs still widened its loss and led the airline to cut its full-year outlook.
Quick Read
- American Airlines shares rose 3.0% on Thursday after third-quarter results beat analysts' forecasts.
- Higher fuel costs widened the airline's net loss and led it to cut its full-year outlook.
- Revenue growth came from premium seats and corporate travel, and the airline chose higher fares over fuller planes.
- The stock remains 30.6% below its 52-week high.
How did American Airlines shares move?
American Airlines Group (Nasdaq: AAL) shares rose 3.0% on Thursday. They closed at $12.60, up from $12.24 the day before.
Why it matters: The gain came on a weak day for the wider market. The S&P 500 slid 1.2%, and the industrial sector fund fell 0.9%.
By the numbers: The stock still sits 30.6% below its 52-week high of $18.15. That high is its top price over the past year.
What did the airline report?
American reported third-quarter earnings and revenue above the consensus, the average forecast of the analysts who follow the company. Its adjusted loss per share was smaller than analysts had expected.
Revenue grew strongly from a year earlier. Passenger revenue, cargo revenue and sales to corporate travelers all rose. Premium cabins grew faster than the main cabin.
Chief executive Robert Isom said the revenue growth was the strongest quarterly increase of his career. That comparison leaves out the recovery years after the pandemic.
Why did the loss widen?
Fuel was the main reason. Isom said higher fuel costs more than offset the revenue gains and pushed the airline into a loss.
The net loss under standard accounting rules widened from a year earlier. Operating income fell. Operating margin, the profit the core business keeps from each dollar of sales, narrowed.
The airline also flew planes slightly less full by choice. Chief Commercial Officer Nathaniel Pieper said American put higher fares per passenger ahead of filling more seats.
What comes next?
What’s next: American cut its full-year outlook because fuel costs weighed on results. Isom said the airline's commercial strategy is working and pointed to another quarter of record revenue growth before the year ends.
He said the focus remains on returning to profit. Fuel prices may remain the main pressure on airline earnings.
Upcoming data may show how households are spending. The Conference Board's consumer confidence survey is due Oct. 27, and September income and spending figures arrive Oct. 29.
For readers
What it could mean for you: People who own American Airlines shares directly carry the full weight of this report, with no other holdings to offset it. The shares rose on the earnings beat, but the lower full-year outlook shows how much fuel prices can swing the airline's profits. If fuel costs stay high, earnings could stay under pressure even with strong ticket sales. If fuel eases, more of the revenue growth may turn into profit. In a broad index fund, a single airline carries far less weight.
Questions and answers
Why did American Airlines stock rise after earnings?
Third-quarter earnings and revenue beat the analyst consensus. The shares rose 3.0% on Thursday while the S&P 500 slid.
Why did American Airlines cut its full-year outlook?
Higher fuel costs drove the cut. Chief executive Robert Isom said fuel costs more than offset the airline's revenue gains and pushed it into a loss.
Did American Airlines make a profit in the third quarter?
No. Its net loss widened from a year earlier, and Isom said the focus remains on returning to profit.
How far is American Airlines stock from its 52-week high?
The shares closed at $12.60 on Thursday. That leaves them 30.6% below their 52-week high of $18.15.
The numbers
| American Airlines (AAL) price | $12.60 |
|---|---|
| American Airlines (AAL) change | +2.98% |
| American Airlines (AAL) 52-week high | $18.15 |
| S&P 500 change | −1.21% |
| 10-year Treasury yield | 4.96% |
Thursday’s close
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