American Airlines Posts Record Revenue but Fuel Costs Deepen Its Loss
American Airlines recorded the highest quarterly revenue in its history in third-quarter results released before the open on the 22nd, but it could not overcome a surge in fuel costs and its loss widened.
Third-quarter revenue was $16.34 billion, up 19.3 percent from a year earlier. It exceeded the top end of the guidance range the company had previously given and also topped the analyst consensus of $16.22 billion compiled by LSEG, The Wall Street Journal reported.
The net loss widened to $269 million, or 41 cents a share, from $114 million, or 17 cents a share, in the same period a year earlier. The adjusted net loss excluding one-time items was 28 cents a share, better than the loss of 36 cents a share expected in a FactSet survey.
Fuel costs drew the line between profit and loss. Third-quarter fuel costs surged by $1.9 billion, or 67.5 percent, from a year earlier. Even so, the loss on an adjusted basis grew by only $71 million from a year earlier, showing that demand absorbed a substantial part of the cost shock.
Demand itself was strong. Premium cabin revenue rose 22.9 percent and main cabin revenue increased 19.5 percent. Total unit revenue climbed 14.5 percent, and domestic U.S. unit revenue rose 13.6 percent.
Chief Executive Robert Isom said the company had achieved record third-quarter revenue and the strongest year-over-year revenue growth of his career, adding that while historically high oil prices had a major impact on the financial results, the company was focused on restoring profitability and building a stronger American over the long term.
The problem lies ahead. American lowered its full-year adjusted results outlook to a loss of between $1.00 and $1.60 a share. In July it had expected a range from a profit of 65 cents to a loss of 65 cents a share, meaning the outlook has retreated sharply in three months. Jet fuel prices, driven up by the war in the Middle East, have pulled the outlook down several times this year.
The company said it also expects an adjusted loss of between 50 cents and $1.10 a share in the fourth quarter. American also said it would slow the pace of its 2027 network growth because of the fuel burden. American thereby became the fourth major U.S. airline this month to lower its full-year outlook, after Delta Air Lines, United Airlines and Southwest Airlines.
The shares fell 3.3 percent in premarket trading to $11.83. The airline stock rally of the day before, when United Airlines put out a strong revenue outlook and United shares rose 6 percent and American 4 percent, cooled within a day.
