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American Airlines (AAL) Up 1.74% on Bright Q3 Revenue Guidance
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Shares of American Airlines (AAL - Free Report) gained 1.74% on Oct 11, ending the trading session at $12.26 per share. The uptick followed management’s decision to increase its revenue forecast for third-quarter 2022. AAL will announce third-quarter results on Oct 20.
Air-travel demand recovered from the pandemic-induced lows. We expect upbeat air-travel demand, following the relaxation of COVID-related restrictions, to have aided American Airlines’ top-line performance in the September quarter. Observance of the Labor Day holiday period during the third quarter is likely to have boosted the air traffic further. Evidently, the decision to hike the revenue guidance comes as no surprise.
Revised Guidance
American Airlines, currently carrying a Zacks Rank #3 (Hold), expects total revenues to rise approximately 13% from the third-quarter 2019 actuals (earlier expectation: increase 10-12%). Total revenue per available seat miles (TRASM: a measure of unit revenue) is now anticipated to be 25% higher than the third-quarter 2019 reading (earlier estimate was a 20-24% rise).
Driven by upbeat demand, the pre-tax margin, excluding net special items, is anticipated to be roughly 4.5% compared with the 2-4% band expected earlier. The third-quarter operating margin (excluding net special items) is expected to be roughly 7%. The average fuel cost per gallon forecast is maintained in the $3.73-$3.78 range. However, the guidance for fuel gallons consumed is decreased to 1,031 million from 1,040 million.
American Airlines now expects third-quarter 2022 capacity to decline 9.6% from the third-quarter 2019 actuals (earlier guidance was a decline in the 8-10% range). Due to low capacity, cost per available seat miles or CASM, excluding fuel and special items, is high and expected to increase roughly 14% in third-quarter 2022 from the third-quarter 2019 actuals (earlier guidance was a 12-14% increase).
Upbeat Passenger Revenues Likely to Aid Airlines’ Q3 Results
Delta Air Lines (DAL - Free Report) will kick-start the third-quarter 2022 earnings season for airlines on Oct 13. Like AAL, we expect DAL’s results to reflect upbeat passenger revenues owing to buoyant passenger volumes.
DAL expects September-quarter revenues to increase in the 1-5% band from the third-quarter 2019 actuals. CASM, excluding fuel and special items, in third-quarter 2022is expected to increase 22% from the third-quarter 2019 actuals.
Like AAL, United Airlines (UAL - Free Report) lifted its revenue guidance for third-quarter 2022. UAL is scheduled to announce results on Oct 18. Like AAL and DAL, we also expect UAL’s results to reflect upbeat passenger revenues owing to buoyant passenger volumes.
UAL now expects operating revenues to grow 12% from the September-quarter level of 2019 (previous guidance was 11%). United Airlines expects TRASM to increase around 25% in the third quarter of 2022 from the third-quarter 2019 actuals (previous view: up in 24-26% band). Adjusted operating margin is expected to be 10.5% in the September quarter.
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American Airlines (AAL) Up 1.74% on Bright Q3 Revenue Guidance
Shares of American Airlines (AAL - Free Report) gained 1.74% on Oct 11, ending the trading session at $12.26 per share. The uptick followed management’s decision to increase its revenue forecast for third-quarter 2022. AAL will announce third-quarter results on Oct 20.
Air-travel demand recovered from the pandemic-induced lows. We expect upbeat air-travel demand, following the relaxation of COVID-related restrictions, to have aided American Airlines’ top-line performance in the September quarter. Observance of the Labor Day holiday period during the third quarter is likely to have boosted the air traffic further. Evidently, the decision to hike the revenue guidance comes as no surprise.
Revised Guidance
American Airlines, currently carrying a Zacks Rank #3 (Hold), expects total revenues to rise approximately 13% from the third-quarter 2019 actuals (earlier expectation: increase 10-12%). Total revenue per available seat miles (TRASM: a measure of unit revenue) is now anticipated to be 25% higher than the third-quarter 2019 reading (earlier estimate was a 20-24% rise).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Driven by upbeat demand, the pre-tax margin, excluding net special items, is anticipated to be roughly 4.5% compared with the 2-4% band expected earlier. The third-quarter operating margin (excluding net special items) is expected to be roughly 7%. The average fuel cost per gallon forecast is maintained in the $3.73-$3.78 range. However, the guidance for fuel gallons consumed is decreased to 1,031 million from 1,040 million.
American Airlines now expects third-quarter 2022 capacity to decline 9.6% from the third-quarter 2019 actuals (earlier guidance was a decline in the 8-10% range). Due to low capacity, cost per available seat miles or CASM, excluding fuel and special items, is high and expected to increase roughly 14% in third-quarter 2022 from the third-quarter 2019 actuals (earlier guidance was a 12-14% increase).
Upbeat Passenger Revenues Likely to Aid Airlines’ Q3 Results
Delta Air Lines (DAL - Free Report) will kick-start the third-quarter 2022 earnings season for airlines on Oct 13. Like AAL, we expect DAL’s results to reflect upbeat passenger revenues owing to buoyant passenger volumes.
DAL expects September-quarter revenues to increase in the 1-5% band from the third-quarter 2019 actuals. CASM, excluding fuel and special items, in third-quarter 2022is expected to increase 22% from the third-quarter 2019 actuals.
Like AAL, United Airlines (UAL - Free Report) lifted its revenue guidance for third-quarter 2022. UAL is scheduled to announce results on Oct 18. Like AAL and DAL, we also expect UAL’s results to reflect upbeat passenger revenues owing to buoyant passenger volumes.
UAL now expects operating revenues to grow 12% from the September-quarter level of 2019 (previous guidance was 11%). United Airlines expects TRASM to increase around 25% in the third quarter of 2022 from the third-quarter 2019 actuals (previous view: up in 24-26% band). Adjusted operating margin is expected to be 10.5% in the September quarter.