American Airlines' profit margin forecast helps equities to rise

(Reuters) – American Airlines (AAL.O) The stock rose 4 percent on Thursday after the company announced that its current-quarter profit margin would be higher than most expected on Wall Street, helped by a drop in fuel costs due to its recent peak.

An American Airlines Boeing 737-800 aircraft launches Los Angeles International Airport (LAX) in Los Angeles, California, USA March 28, 2018. REUTERS / Mike Blake

The # 1 passenger airline in the US has maintained its full-year forecast and forecasts additional revenue of $ 1 billion next year as aircraft improvements, on-board technology and food offerings take effect.

His shares rose 4 percent to $ 31.54 in the morning trade.

They have still dropped 35 percent in the last 12 months as American has had a hard time increasing sales with rivals at Delta Air Lines Inc (DAL.N) and United Airlines (UAL.O).

Based in Fort Worth, Texas, the company announced that it is targeting a pre-tax margin of 4.5% to 6.5% in the fourth quarter, excluding special items. That's a result of Wall Street expectations, analysts said.

Carrier Forecast Unit revenue, a closely watched performance measure that compares revenue with flight capacity, is expected to increase between 1.5 percent and 3.5 percent in the fourth quarter.

"Sales revenue guidance has consistently outperformed this season as the industry is experiencing good demand and improved yields, partly driven by strong close-in bookings," said Cowen analyst Helane Becker.


In the third quarter, American Airlines' earnings halved in line with Wall Street's estimates of higher fuel costs and the impact of Hurricane Florence, which had to cancel about 2,100 flights in September.

The company said it would cut capacity, break off loss-making routes and delay delivery of new aircraft to cut costs, but maintained its full-year earnings guidance of $ 4.50 to $ 5.00 per share.

Fuel costs increased 42 percent in the quarter. Worries about margins have hurt American and rival stocks, including Delta and Southwest.

Hurricane Florence hit North Carolina and South Carolina in mid-September. This affected several companies and forced airline, subcontractor, auto and steel companies to cease operations.

The Company's net income for the third quarter ended September 30, 2010, was $ 341 million, or $ 0.74 per share, compared to $ 661 million, or $ 1.36 per share, the prior year.

On an adjusted basis, the airlines earned $ 1.13 per share, in line with analyst expectations. Operating revenue increased 3.7 percent to $ 11.64 billion.

Reporting by Rachit Vats in Bengaluru and Tracy Rucinski in Chicago; Arrangement by Arun Koyyur and Bill Rigby

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