NASDAQ 100, Dow Jones, S&P 500: American Airlines Raises 2023 Earnings Outlook Amid Travel Surge

Highlights

• American Airlines increases 2023 earnings outlook after strong peak travel season.
• Q2 earnings surpass expectations with higher revenue and net income.
• Third-quarter projections include a drop in unit revenues but maintain profitability.

Optimistic Outlook: American Airlines Expects Higher Profits for 2023

American Airlines has increased its earnings outlook for 2023 following a strong start to the peak travel season, joining other airlines benefiting from the ongoing surge in demand. The Fort Worth, Texas-based carrier now expects to earn between $3 and $3.75 per share for the full year, adjusted for one-time items, compared to the previous forecast of about $2.50 to $3.50. This updated profit guidance aligns with Wall Street’s expectations of $3.10 per share. The airline’s positive outlook reflects the optimism surrounding travel demand, particularly for international flights, as airfares have declined compared to last year’s limited options due to pandemic-related disruptions.

 

AA Outperforms in Second Quarter

In the second quarter, American Airlines outperformed analysts’ expectations, reporting adjusted earnings per share of $1.92, surpassing the anticipated $1.59. Total revenue for the quarter reached $14.06 billion, a 4.7% increase from the previous year and higher than the expected $13.74 billion. The company’s net income for the quarter was $1.34 billion, or $1.88 per share, compared to $476 million, or 68 cents per share, in the same period last year. These figures take into account one-time items, including costs associated with early retirements of aircraft during the pandemic.

Third Quarter Revenue Drop Expected

Looking ahead, American Airlines foresees a drop in unit revenues of up to 6.5% in the third quarter compared to the same period last year, with capacity growth of approximately 7%. The company expects to earn an adjusted 85 to 95 cents per share during the third quarter, in line with estimates. The airline’s projections incorporate labor deal costs, including a tentative agreement with its pilots. However, the pilots’ union is seeking improvements to the contract following a recent deal between rival United Airlines and its pilots’ union.

CEO Sees Improved Financials

American Airlines CEO Robert Isom expressed his commitment to matching wages, ensuring the pilots are aware of the company’s intentions. The positive earnings performance and increased outlook highlight American Airlines’ resilience and recovery from the pandemic’s impact. With strong demand and improved financials, the airline is poised to navigate the evolving travel landscape, providing increased options and a positive experience for travelers.