American Airlines Raises Earnings Outlook for 2023 as Travel Demand Soars


The report noted that American Airlines’ second-quarter performance exceeded Wall Street expectations.

American Airlines Inc (NASDAQ: AAL), one of the largest airlines around the world has announced an upward revision of its earnings outlook for 2023. The news comes on the heels of a robust start to the peak travel season, reaffirming the carrier’s resilience in the face of unprecedented challenges within the airline industry.

The airline revealed according to a CNBC report that it now expects to earn between $3 and $3.75 per share for the full year, after adjusting for one-time items. This represents a notable increase from their previous prediction made in May, which anticipated earnings of approximately $2.50 to $3.50 per share.


Impact of the Pandemic

The airline industry is experiencing a notable rebound as travel demand increases, particularly for international travel. Airline executives have expressed optimism about the recovery, buoyed by the easing of travel restrictions, higher vaccination rates, and a growing desire among people to travel again after a prolonged period of restricted movement due to the COVID-19 pandemic.

One noticeable impact of the current scenario is the decline in airfares compared to the previous year. As demand outpaces supply, airlines have been able to offer more competitive pricing and a broader range of flight choices to passengers.

American Airlines said it is closely monitoring its unit revenues, which are expected to drop by up to 6.5% in the third quarter of the current year compared to the same period in 2022. Despite the expected decline in unit revenues, American Airlines is planning to expand its capacity for Q3, with growth projections of up to 7% compared to the same period in 2022.

In terms of earnings, American Airlines has forecasted adjusted Earnings Per Share (EPS) range of 85 cents to 95 cents for the third quarter, which aligns with estimates from financial analysts. The announcement comes with an acknowledgment of ongoing labor negotiations, particularly with its pilots’ union. The company’s forecasts include costs associated with labor deals, including a tentative agreement reached with its pilots.

American Airlines Q2 2023 Performance Exceeds Expectations

The report noted that American Airlines’ second-quarter performance exceeded Wall Street expectations. According to the breakdown, the airline announced adjusted profits per share of $1.92, exceeding the $1.59 consensus forecast from The Wall Street.

Also, the company’s total revenue for Q2 amounted to $14.06 billion, which exceeded the analysts’ anticipated figure of $13.74 billion. The record revenue marks a significant 4.7% increase compared to the same period a year earlier, signaling a strong rebound in passenger demand and economic recovery.

Furthermore, American Airlines reported a net income of $1.34 billion for Q2 or $1.88 per share. This marks a substantial improvement from the same period in the previous year when the net income was $476 million, or 68 cents per share.

For the second quarter, American Airlines’ adjusted net income was $1.37 billion, or $1.92 per share. Meanwhile, the airline’s flying capacity increased by 5.3% from the same period a year ago.


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