American Airlines Raises 2023 Earnings Outlook Amid Strong Travel Season

American Airlines, based in Fort Worth, Texas, has raised its earnings outlook for 2023 following a robust start to the peak travel season. The airline now expects to earn between $3 and $3.75 per share for the full year, adjusting for one-time items, up from its previous forecast of $2.50 to $3.50 in May. This updated profit guidance aligns with Wall Street’s expectations of $3.10 per share, according to Refinitiv consensus estimates.

Despite the positive outlook, American shares were down more than 5% in morning trading.

Airline executives have shown optimism about the demand for travel, particularly for international trips. Compared to last year, some airfares have declined, as airlines struggled to rebuild schedules after the worst of the Covid pandemic. American, however, is experiencing capacity growth of up to 7% from the same period in 2022.

American’s second-quarter performance surpassed Wall Street expectations. The airline reported adjusted earnings per share of $1.92, higher than the expected $1.59. Additionally, total revenue of $14.06 billion exceeded the anticipated $13.74 billion, representing a 4.7% increase from the previous year.

The company’s net income for the second quarter was $1.34 billion, or $1.88 per share, up from $476 million, or 68 cents per share, in the same period a year earlier. After adjusting for one-time items, American earned $1.37 billion, or $1.92 per share.

American’s flying capacity rose by 5.3% from the previous year. The airline remains optimistic about its third-quarter performance, expecting unit revenues to drop up to 6.5% from a year earlier, with an anticipated capacity growth of up to 7%. The company foresees earnings of 85 cents to 95 cents per share for the third quarter, in line with estimates.

Despite ongoing labor negotiations, American’s CEO, Robert Isom, assured that the airline plans to match wages following a deal struck by a rival airline and its pilots’ union.

The airline’s record revenue for the second quarter and increased flying capacity indicate a positive outlook amid the ongoing recovery in the travel industry.

Sources: AirGuide Business airguide.info, msn.com, cnbc.com