American Airlines (AAL) shares powered higher Thursday after the biggest U.S. carries boosted its fourth quarter profit forecast amid the ongoing surge in domestic travel demand and a solid holiday season that saw it capitalize on the challenges faced by rival Southwest Airlines (LUV).
American said it sees adjusted profits in the region of $1.12 and $1.17 per share for the three months ending in December, nearly double its prior forecast of between 50 cents and 70 per share, with margins leaping to between 10.25% and 10.5%. Revenues, as well, are likely to be firmly higher than prior estimates, rising between 16% and 17% from 2019 levels amid a surge in domestic travel.
American will publish its formal fourth quarter earnings on January 26, before the market opens, with a conference call the following day at 8:30 am EST.
The carrier said it flew 66 million total available seat miles over the fourth quarter, a tally that remains some 6.1% south of 2019 levels and reflects the ongoing issues of capacity use that airlines face amid challenges linked to hiring both pilots and cabin crew in a tight labor market.
American Airlines shares were marked 5.7% higher in mid-day trading following the profit update to change hands at $16.22 each.
Last month, American's smaller rival Delta Air Lines (DAL), which reports fourth quarter earnings on Friday, boosted its near-term profit forecasts to between $5 to $6 per share next year, nearly double its expected tally for 2022, with revenue gains of between 15% and 20%, thanks to what it described as a sustained surge in travel demand paired with falling jet fuel prices and a decline in non-fuel operating costs.
Momentum into the final months of this year, Delta said, should help 2022 revenues rise to between $45.5 billion and $45.6 billion, with adjusted earnings of between $3.07 and $3.12 per share.
Delta shares were marked 2% higher in early Thursday trading to change hands at $38.95 each.
