American Airlines stock soars as focus on flight reliability fuels big profit beat

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Shares of American Airlines Group Inc. took flight Thursday after the air carrier beat fourth-quarter profit expectations by a wide margin and provided an upbeat 2024 outlook, while recording best-ever flight-reliability measures over the busy holiday travel period.

The company said it produced record completion factors for the fourth quarter and the full year of 2023, with the lowest number of annual flight cancellations since 2013.

“The airline’s strong operational momentum continued through the holiday travel period,” the company said in a statement. “American achieved its best-ever completion factor and on-time departures as well as its lowest mishandled baggage rate over the holidays.”

The stock
AAL,
+7.50%
surged 6.9% toward a five-month high in morning trading. That puts it on track for the best one-day post-earnings performance since soared 9.3% on Jan. 28, 2021, when Q4 2020 results were reported, according to FactSet data.

“American has established a culture in which operational reliability is the core tenant,” Melius Research analyst Conor Cunningham wrote in a note to clients. “A solid operation makes everything easier, allowing for more certainty on costs and ultimately, financial outcomes.”

The company said net income dropped to $19 million, or 3 cents a share, from $803 million, or $1.14 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of 29 cents were well above the FactSet consensus of 11 cents.

Adjusted operating margin fell to 5.1% from 10.5% a year ago, but was above the guidance range provided in October of between 2% and 4%.

Revenue fell 1% to $13.06 billion, but was above the FactSet consensus of $13.01 billion, while 2023 revenue grew 7.8% to a record $52.79 billion.

Load factor for the quarter slipped to 83.6% from 83.9%, but beat expectations of 82.9%, as capacity growth of 5.8% outpaced traffic growth of 5.4%.

Looking ahead, the company expects an adjusted per-share loss of between 15 cents and 35 cents for the first quarter, which surrounds the FactSet loss consensus of 22 cents. For 2024, the company guided for adjusted EPS of between $2.25 and $3.25, which is above the FactSet consensus of $2.14.

“This year, we’ll continue to prioritize reliability, profitability and accountability while building an even more efficient and resilient airline,” said Chief Financial Officer Robert Isom, according to an AlphaSense transcript of the post-earnings conference call with analysts.

The stock has run up 34.9% over the past three months, while the U.S. Global Jets ETF
JETS,
+1.50%
has climbed 27.5% and the S&P 500 index
SPX,
+0.37%
has advanced 16.7%.



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Alexandra Williams
Alexandra Williams
Alexandra Williams is a writer and editor. Angeles. She writes about politics, art, and culture for LinkDaddy News.

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