American Airlines shares fall as fuel costs weigh on third-quarter outlook despite earnings beat
American Airlines Group Inc (NASDAQ:AAL, XETRA:A1G) shares fell about 8% Thursday after the carrier reported better-than-expected second quarter results but issued a cautious outlook for the third quarter amid rising fuel costs.
The company reported adjusted earnings of $0.15 per share for the quarter, ahead of Wall Street expectations of $0.03 per share.
Revenue reached a record $16.74 billion, up 16.3% from a year earlier and broadly in line with analyst estimates.
The company highlighted strong demand across its commercial operations, with revenue growth across premium, Main Cabin, domestic and international segments. Premium passenger unit revenue increased 13.4% year over year, while Main Cabin passenger unit revenue rose 8.8%. Domestic passenger unit revenue increased 10.6%, while international performance was supported by growth across the Atlantic, Pacific and Latin America regions.
Corporate travel demand also remained strong, with managed corporate revenue rising 26% year over year during the quarter.
However, higher fuel expenses continued to pressure results. American reported fuel costs increased by more than $2.2 billion, or 83%, compared with the same period last year. The company said stronger revenue performance helped offset nearly half of the increase.
"American delivered year-over-year revenue growth of more than 16% in the second quarter, exceeding our initial expectations and continuing the momentum we've built across the business," American CEO Robert Isom said.
"This performance reflects the strength of our commercial strategy, driven by our four pillars: elevate the customer experience, grow the global network, drive premium revenue and lead in loyalty."
Looking ahead, American expects third quarter revenue to increase 16% to 19% year over year. The company anticipates average fuel prices of about $3.75 per gallon in the quarter and expects costs excluding fuel and profit sharing to rise 2.5% to 4.5%.
American forecast third quarter adjusted earnings per diluted share ranging from a loss of $0.70 to a loss of $0.10, below analyst expectations for a profit of roughly $0.28 per share.
For the full year, the company expects adjusted earnings per diluted share between a loss of $0.65 and a profit of $0.65.