American Airlines Stock Leaps After Boosting Q4 Profit Forecast

Solid travel demand and a robust holiday season helped American Airlines nearly double its previous forecast for fourth quarter profits.

American Airlines  (AAL) – Get Free Report shares powered higher Thursday after the biggest U.S. carries boosted its fourth quarter profit forecast amid the ongoing surge in domestic travel demand and a solid holiday season that saw it capitalize on the challenges faced by rival Southwest Airlines  (LUV) – Get Free Report.

American said it sees adjusted profits in the region of $1.12 and $1.17 per share for the three months ending in December, nearly double its prior forecast of between 50 cents and 70 per share, with margins leaping to between 10.25% and 10.5%. Revenues, as well, are likely to be firmly higher than prior estimates, rising between 16% and 17% from 2019 levels amid a surge in domestic travel. 

The carrier said it flew 66 million total available seat miles over the fourth quarter, a tally that remains some 6.1% south of 2019 levels and reflects the ongoing issues of capacity use that airlines face amid challenges linked to hiring both pilots and cabin crew in a tight labor market.

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American Airlines shares were marked 4.3% higher in pre-market trading following the profit update to indicate an opening bell price of $16.00

Last month, American’s smaller rival Delta Air Lines  (DAL) – Get Free Report, which reports fourth quarter earnings on Friday, boosted its near-term profit forecasts to between $5 to $6 per share next year, nearly double its expected tally for 2022, with revenue gains of between 15% and 20%, thanks to what it described as a sustained surge in travel demand paired with falling jet fuel prices and a decline in non-fuel operating costs.

Momentum into the final months of this year, Delta said, should help 2022 revenues rise to between $45.5 billion and $45.6 billion, with adjusted earnings of between $3.07 and $3.12 per share.

Delta shares were marked 2.02% higher in pre-market trading to indicate an opening bell price of $38.95 each. 

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