Thursday, American Airlines Group Inc. stock went up and down after the company reported a third-quarter profit that was better than expected and raised its full-year outlook. The load factor also reached its best level in more than 10 years.
The results were very different from the previous quarter’s report, in which the airline gave a big full-year profit warning, saying that problems were caused by too much capacity in the industry and also mistakes the company made, like actions that made travel agencies dislike the company.
Chief Executive Robert Isom said, “We have taken aggressive action to reset our sales and distribution strategy and reengage the business travel community. We are confident that this will improve our revenue performance over time.”
On a rough morning, AAL -0.90% stock prices rose 2.7%, getting close to a five-month high. Before the market opened, the price went up as much as 8.2% right after the results came out. But it quickly turned around and fell as much as 4.1% before the market opened, but it later came back up.
The early weakness might have been caused by a less-than-optimistic view of unit sales growth in the fourth quarter. This is because October was strong and December is expected to be strong, but November was weak.
Before September 30, the company had net losses of $545 million, or 83 cents per share. This year, they were only $149 million, or 23 cents per share.
Take out one-time things, and adjusted earnings per share dropped from 38 cents to 30 cents. This was still much higher than the 16 cents that FactSet predicted.
It made more money than expected, with $13.65 billion in sales. Passenger sales went up 0.8% to $12.52 billion, cargo sales went up 5% to $202 million, and “other” sales went up 6% to $922 million.
At the same time, overall revenue per available seat mile dropped by 2%, to 18.04 cents. A FactSet transcript shows that Chief Financial Officer Devon May told analysts on the call after the earnings report that TRASM is likely to be down 1% to 3% for this quarter.
Tom Fitzgerald, an expert at TD Cowen, said that the middle point of that outlook is less than his prediction of a 1.4% drop.
The load factor rose from 84.0% to 86.6%, which is the highest number since American and US Airways merged in 2013.
A load factor of 84.2% was expected, but that number was beaten by 7.1% more traffic, or 43.11 billion revenue passenger miles. Capacity growth, on the other hand, was only 3.9%, or 50.04 billion available seat miles. It was the biggest beat since the third quarter of 2020.
The American Airlines team showed their continued toughness in the third quarter by quickly getting back to normal after a number of unusual events, including the CrowdStrike shutdown and Hurricanes Debby and Helene, the company said.
The American said it had the highest success factor among its U.S. network carrier peers, even with those events.
The company changed its range of estimates for full-year adjusted EPS from between 70 cents and $1.30 to between $1.35 and $1.60 for the next year.
Already this year, the stock has dropped 4.2%, while the U.S. Global Jets ETF (JETS -0.60%) has gone up 19.4% and the S&P 500 index (SPX 0.25%) has gone up 21.7%.
