American Airlines (AAL) Stock Surges 11% After Forecasting Q2 Profit

Shares of American Airlines (NYSE: AAL) surged nearly 11% in premarket trading Thursday after the company said it predicts a Q2 profit as travel restrictions ease in the post-pandemic era.

For Q1, the airline reported an adjusted loss per share of $2.32, compared to a loss per share of $4.32 in the year-ago period and an expected loss per share of $2.42. Operating revenue came in at $8.90 billion in the period, up from $4.01 billion in the year-ago quarter and just above analyst estimates of $8.82 billion.

The company reported passenger revenue of $7.82 billion, up from $3.18 billion in the year-ago period and above the expected $7.79 billion. Available seat miles totaled 59.53 billion, up 58% YoY, and compared to the consensus estimates of 59.46 billion.

Revenue passenger miles stood at 44.29 billion in the quarter, up 97% YoY and slightly below the estimated 46.87 billion. American Airlines reported a load factor of 74.4%, up from 59.5% in the same period last year and below the consensus projection of 79.6%.

The airline expects Q2 revenue to be 6-8% higher than Q2 2019. It noted a steady increase in domestic travel demand, with demand for international travel recovering sharply as well.

American Airlines now expects Q2 capacity to be in the range of 92% to 94% of what it was in Q2 2019.

“The demand environment is very strong, and as a result, we expect to be profitable in the second quarter based on our current fuel price assumptions.”

Goldman Sachs analyst Catherine O'Brien noted that Q2 guidance is “significantly better than our forecast into the print (GSe +2%) and investor expectations per our recent conversations (which were recently raised following strong June Q revenue guides from competitors over the last week).”

Cowen analyst Helane Becker added that results and strong outlook were fueled by “continued strong demand driving prices higher and lower capacity plans due to a lack of crew and higher fuel prices.”

Becker is focused on “minimum liquidity levels and confidence in the operations for the summer.”

By Senad Karaahmetovic

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