American Airlines beats profit expectations on solid demand

American Airlines reported a fourth-quarter profit of US$319 million, slightly higher than analysts expected, as strong travel demand helped the carrier overcome higher fuel prices.

The airline predicted a modest increase in a key revenue measurement for the first quarter.

Chairman and CEO Doug Parker said Thursday that the airline had a challenging 2018 because of heavier spending on fuel and operational difficulties during the summer, but it enters the new year with momentum from strong travel demand.

The shares rose in premarket trading.

American Airlines Group Inc said it swung to a profit in the fourth quarter after losing US$583 million a year earlier.

Profit, excluding special items, worked out to US$1.04 per share, two cents better than the average forecast of 10 analysts surveyed by Zacks Investment Research.

Revenue rose three per cent to US$10.94 billion, below analysts’ forecast of US$11.01 billion, however. Expenses rose four per cent, driven largely by high fuel prices.

American said revenue for every seat flown one mile, a closely watched measure of pricing power in the airline business, would be up to a flat two per cent in the first quarter. That is roughly in line with forecasts from Delta Air Lines and United Airlines but weaker than guidance than Southwest Airlines offered on Thursday. Southwest Airlines said it lost US$10 million to $15 million so far from the partial government shutdown but overall travel demand remains strong, boosting the carrier’s outlook for first-quarter revenue.

American predicted that full-year 2019 adjusted earnings will range between US$5.50 and US$7.50 per share.

Before the opening bell, shares of the Fort Worth-based company rose US$1.89, or six per cent, to US$33.54. The stock has decreased 46 per cent in the last 12 months.

AP