American Airlines hikes its earnings and revenue guidance for Q4 2022

American Airlines stock jumped more than 5% in premarket trading Thursday Jan. 12 after the carrier hiked its earnings and revenue guidance for the fourth quarter.

American now expects adjusted earnings per share of $1.12 to $1.17, up from a previous estimate of $0.50 to $0.70. The new guidance is considerably higher than the $0.60 EPS expected by analysts, according to FactSet data.

The carrier also sees better revenue than it previously anticipated, expecting a 16% to 17% increase on 2019 levels. It had guided for an 11% to 13% rise. Revenue per available seat mile surged 24% from 2019 levels, it added.

Strong demand in recent months, coupled with industrywide capacity constraints, such as aircraft delivery delays and pilot shortages, has enabled airlines to hike airfares. That led to bumper revenue for all major carriers in the third quarter.

American’s trading update Thursday suggests more of the same when fourth quarter earnings season comes around. Investors seemingly think so, as shares of American’s peers also moved higher. Delta Air Lines (DAL), which reports earnings Friday, was 2.4% up, while United Airlines (UAL) and Southwest Airlines (LUV) rose 1.5%.

The update may also come as a relief to investors concerned over the impact of flight disruption during the holiday season. Bad weather led to thousands of flight cancellations, most notably for Southwest which experienced knock-on problems with crews and scheduling.

American was the least impacted of the four biggest carriers, canceling 869 flights between Dec.21 and Dec.31, or 3% of flights, according to flight tracker FlightAware.com. Southwest canceled more than 16,000 over the same period.

Southwest has said it expects to post a net loss, driven by the cancellations, estimating a $725 million to $825 million hit from the disruption. barrons.com