American Airlines Expects Domestic Gains, But Hedges On Future Outlook

Forbes

3 days ago

An American Airlines Airbus A321-231 aircraft sits at the gate in Las Vegas in January. (Photo by ... More Artur Widak)
American Airlines provided negative current quarter guidance and unusually wide full-year guidance as it reported second quarter results. Its pre-tax margin was again below competitors'.
Interviewed on CNBC Squawk Box, American CEO Robert Isom said that in the current quarter, 'We see domestic travelers coming back into this.' He said July was a difficult month, partially due to weather, but 'We see high demand trends moving into our future.'
American said it expects to report a current quarter loss per share between 10 cents and 60 cents.
For the full year, American expects full-year adjusted earnings between a loss of 20 cents per share and a gain of 80 cents per share, with a mid-point of 30 cents. The carrier 'believes the top end of the range is achievable if demand in the domestic market continues to strengthen and only expects to be at the bottom end of the range if there were to be macro weaknesses that are not seen today,' according to its earnings release statement.
In January, American had estimated full-year EPS between $1.70 and $2.70.
For the second quarter, the carrier reported revenue of $14.4 billion, up 0.4% over the same quarter a year earlier. Excluding items, net income was $628 million or 91 cents per share. In the same quarter a year earlier, net income was $717 million or $1.01 per share.
In pre-market trading an hour before the opening,, American shares were down about 7% to $11.77 a share.
American said its pre-tax margin was 5.8%. Delta reported a pre-tax margin of 11.6%, while United reported 11%.
Regarding international, the carrier cited 'continued strength in premium cabin demand in the second quarter, particularly to long-haul international destinations. All international entities delivered positive unit revenue growth year over year, with Atlantic passenger unit revenue up 5%. These results contributed to American's industry-leading passenger unit revenue year-over-year improvement for the fourth consecutive quarter.'
While international PRASM rose 5%, Domestic PRASM declined 6.4%.