American Airlines improved its earnings, but its shares fell. here’s why

Despite better second-quarter flight completions over Memorial Day weekend, shares of American Airlines Group (AAL) fell more than 5% after the company raised its outlook for the year less than investors had expected, based on results from other airlines.

Key points to remember

  • American Airlines posted record quarterly revenue of $14.1 billion and earnings of $1.92 per share.
  • Fuel costs fell 35% and the airline saw a 17% increase in operating revenue.
  • AAL shares fell more than 5% as its forecast for the year fell short of forecasts by airline competitors.

American Airlines posted record quarterly revenue of $14.1 billion in the second quarter, up 4.7% from the same period a year ago. The Fort Worth, Texas-based airline said strong demand, particularly in June, helped the result.

For the three months ending June, the airline posted adjusted net income of $1.4 billion, or $1.92 per share, higher than the $533 million in revenue at $0.76 per share it reported in the second quarter of 2022.

American provided an average load factor of 86.2%, a figure that shows the capacity at which flights are operating, which was in line with the load factor of 86.9% in the second quarter of 2022. The airline saw its fuel costs fall by 35% compared to the previous quarter.

American increased its operating margins to 15.4% in the second quarter, from 7.5% over the same period last year. The company said it delivered a record number of Memorial Day flight completions after running its busiest schedule for the holiday.

Stocks fall as earnings fail to match rivals

While American Airlines showed improved year-over-year performance, other airlines did the same. Delta Air Lines (DAL) reported an 18.7% increase in operating revenue last week after posting a record drop in international travel sales in June.

American Airlines adjusted third-quarter earnings to between $0.85 and $0.95, in line with analyst estimates of $0.90. It also raised its full-year guidance to adjusted earnings of $3 to $3.75 per share, better than the high of $3.50 per share it expected last quarter, and the $3.04 per share earnings analysts had expected.

However, American’s forecast fell short of what their competitors were promising. A day earlier, United Airlines raised its expectations for the third quarter above analysts. And last week, Delta raised its full-year outlook to $6-7 earnings per share, above its previous target of $5-6.

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