American Airlines (AAL) topped earnings estimates and reported record revenue in the third-quarter early Thursday. The airline giant's earnings are the latest signal the airline industry is recovering from the Covid pandemic. Airline stocks have surged this week, after United Airlines (UAL) also beat views. American Airlines stock advanced early Wednesday.
XThe reports from AAL and UAL follow last week's record revenue and upbeat forecasts from Delta Air Lines (DAL). Fellow airline stock Alaska Air Group (ALK) also beat earnings views early Thursday. The company's EPS jumped 72% to $2.53 while sales rose 47% to $2.8 billion, according to FactSet.
The recent earnings reports suggest the airline industry is recovering to pre-pandemic levels, with air carriers reporting strong demand for air travel. The industry is getting a boost from a strong dollar, which is making many international destinations more affordable.
American Airlines Earnings
Estimates: Wall Street predicted earnings per share would balloon to 56 cents, up from a loss of 99 cents a year ago. Analysts expected revenue to grow 49% to $13.4 billion, according to FactSet.
Results: American Airlines reported EPS grew to 69 cents per share, increasing from the 99 cent per share loss in 2021. Sales jumped 52% to $13.5 billion in Q3, representing a 13% increase over the same period in 2019 despite a 9.6% cut in its fleet capacity.
"Demand remains strong, and it's clear that customers in the U.S. and other parts of the world continue to value air travel and the ability to reconnect post-pandemic," American Airlines CEO Robert Isom said in a statement Thursday.
American Airlines said it expects demand increasing as Covid travel restrictions and testing requirements continue to be lifted worldwide.
Outlook: Based on current trends, AAL expects revenue in the fourth quarter to be 11%-13% higher compared to Q4 2019, on 5%-7% lower flying capacity. The air carrier forecasts an operating margin of 5.5%-7.5% and diluted EPS of 50 cents to 70 cents per share.
American Airlines stock edged up 3% ahead of Thursday market trading. On Wednesday, shares climbed along with other airline stocks, up 2.12% to $13.99. AAL shares have a 39 Composite Rating out of 99. The stock has a 43 Relative Strength Rating. American Airlines stock has an EPS rating of 65.
Fort Worth, Texas-based American last week reported it expected sales growth and increased its guidance for the quarter.
The air carrier's third-quarter earnings come after American Airlines posted a profit of 76 cents per share in Q2, breaking a string of nine straight quarters with losses. Revenue also increased dramatically, ballooning 81% to $13.4 billion in the second quarter.
Airline Stocks: United Airlines Earnings
Estimates: Analysts forecast earnings growing to $2.28 per share, up from a loss of $1.02 a year ago. Sales were expected to increase 65% to $12.7 billion.
Results: United Airlines reported EPS of $2.86 per share, up from the loss of $1.02 in Q3 2022. Revenue grew 67% to $12.9 billion in Q3. That is also up 13% compared to Q3 2019.
Outlook: United expected adjusted EPS for Q4 in the range of $2.00-$2.25 per share. Total revenue per available seat mile (TRASM) was expected to be up 24%-25% compared to 2019. The air carrier also expected jet fuel be around $3.61 per gallon in Q4.
United Airlines CEO Scott Kirby said it was the best operational quarter in the company's history, another sign that the airline industry is recovering.
"Despite growing concerns about an economic slowdown, the ongoing Covid recovery trends at United continue to prevail and we remain optimistic that we'll continue to deliver strong financial results in the fourth quarter, 2023 and beyond," Kirby said in a press release Tuesday.
United Airlines stock leapt 5.6% to 38.96 Wednesday. On Tuesday, shares popped 3.2%. UAL shares have a 51 Composite Rating out of 99. The stock has a 47 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement. The EPS rating is 78.
In September, the Chicago-based airline reported it saw "strong demand" in Q3 compared with before the Covid-19 pandemic.
Last week, United Airlines announced it plans to add new trans-Atlantic travel locations to its schedule, a sign it is ramping up flights in the aftermath of the Covid pandemic.
Beginning in the summer of 2023, United says it will add three new city destinations, and six more flight options to popular destinations — including Rome, Paris, Barcelona, London and Berlin. United said in a press release it saw "historic levels of demand for travel to Europe in the summer peak, up 20% compared to 2019."
In the second quarter, United earned $1.43 per share, up from a net loss of 3.91 in Q2 2021. Revenue ballooned 121% to $12.1 billion.
Like many air carriers, United had a run of losses during the Covid pandemic. With United's Q3 earnings, the company has had consecutive profitable quarters for the first time since Q4 2019.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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