Post Content
American Airlines (AAL) first quarter earnings topped expectations, but it sees big fuel charges looming as the conflict in the Middle East continues.
American said its fuel charges rose 10% in the quarter and that it expects fuel costs to jump by $4 billion for the year. American rival United (UAL) said its fuel costs jumped $340 million in the quarter.
American said based on the forward fuel curve and the current revenue outlook, the midpoint of the company’s full-year earnings adjusted EPS guidance is essentially flat, within a range of ($0.40) to $1.10.
For Q1, American reported revenue of $13.92 billion vs $13.85 expected, up 10.% versus a year ago. American posted an adjusted loss per share of $0.40 vs $0.46, narrower than expected, translating to an adjusted net loss of $267 million, a decrease of 30.8% compared to last year.
American stock was higher in premarket trade.
“Even in a volatile operating environment, our pretax margin improved by nearly 2 points year over year, and we still anticipate modest profitability for the year assuming the current forward fuel curve,” American CEO Robert Isom said in a statement. “Demand for our product is growing, and our customer satisfaction scores are improving.”
American said its revenue would have been even higher if not for a $320 million impact from winter storms. Available seat miles (ASM) in the quarter rose 3% in the quarter, with total revenue per available seat mile (TRASM) rising 7.6%.
In terms of its second quarter outlook, American said its sees total revenue climbing 13.5% to 16.5%, with available seat miles up in a range of 4.0% to 6.0%, and its adjusted EPS in a range of ($0.20) to $0.20.
While American has not been able to match Delta (DAL) and United in growing its premium business, those initiatives are a key driver of growth for the airline. American said its lie-flat and Premium Economy seat inventory grew more than twice as fast as main cabin seats in Q1.
The airline is seeing growth in the important corporate sector too.
“The company continued to win share in corporate channels during the first quarter, with managed corporate revenue increasing 13% year over year. Additionally, American is focused on increasing premium leisure revenue and improving upsell to higher-margin products. Premium unit revenue continued to outperform the Main Cabin in the first quarter,” American said.
Pras Subramanian is the Lead Transportation Reporter for Yahoo Finance. You can follow him on X and on Instagram.