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American Airlines (AAL) Beats on Q2 Earnings, Cuts '18 View
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American Airlines Group Inc.’s (AAL - Free Report) second-quarter 2018 earnings (excluding 41 cents from non-recurring items) of $1.63 per share surpassed the Zacks Consensus Estimate by 4 cents. Quarterly earnings decreased on a year-over-year basis mainly due to high fuel costs.
Revenues of $11,643 million fell short of the Zacks Consensus Estimate of $11,652 million. The top line, however, improved on a year-over-year basis. Strong demand for air travel led to the year over year improvement in the top line.
Total revenue per available seat miles (TRASM: a key measure of unit revenue) improved 2.1% to 15.97 cents in the reported quarter. Consolidated yield improved 1%. Passenger revenue per available seat miles (PRASM) improved 1.5%.
While traffic (measured by revenue passenger miles) was up 2%, capacity (measured by average seat miles) was up 1.6%. Consolidated load factor (percentage of seats filled by passengers) increased to 83.4% from 83% a year-ago as traffic growth outpaced capacity expansion in the second quarter of 2018.
Total operating expenses (on a reported basis) climbed 10.3% year over year to approximately $10,615 million primarily due to the rise in fuel costs. Expenses pertaining to salaries and benefits were up 1.8%. Consolidated operating costs per available seat miles (CASM: excluding fuel and special items) increased 2.4%.
During the quarter under review, this Zacks Rank #3 (Hold) company returned $396 million to shareholders through dividends and buybacks. Furthermore, the carrier also declared a dividend of 10 cents per share. The dividend will be paid on Aug 21, to the shareholders on Aug 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We are impressed by the company’s efforts to reward shareholders through stock repurchases and dividend payments. Meanwhile, the carrier deferred deliveries of 22 A321neo planes in a bid to spread out capital expenditures. The planes were previously scheduled for delivery in 2019, 2020 and 2021.
American Airlines Group Inc. Price, Consensus and EPS Surprise
TRASM is expected to increase in the band of 1% to 3% in the third quarter of 2018. Pre-tax margin excluding special items is projected in the range of 5% to 7% in the third quarter. Consolidated jet fuel per gallon (including taxes) is projected in the band of $2.22 to $2.27 for the third quarter.
Adjusted earnings per share in 2018 are now expected between $4.50 and $5.00 (previous guidance had hinted at earnings between $5 and $6). The Zacks Consensus Estimate for 2018 earnings is currently pegged at $4.74 per share. Higher fuel costs led to the view being trimmed.
Consolidated CASM (excluding special items and fuel) is expected to increase 1% in the third quarter of 2018. The metric is also anticipated to increase approximately 1.5% in 2018. The metric is still expected to increase in the band of 1% to 2% in each of 2019 and 2020.
Capacity (system) in the third quarter is projected to increase 3.3% year over year. The metric is expected to increase 1.6% in the final quarter of 2018. Capacity in 2018 is expected to grow 2.2%, compared with 2.5% expected earlier.
Upcoming Releases
Investors interested in the broader Transportation Sector are awaiting second-quarter 2018 earnings reports from key players, namely Genesee & Wyoming Inc. , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) . Genesee & Wyoming will release results on Jul 27. C.H. Robinson and Expeditors will announce the same on Jul 31 and Aug 7 respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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American Airlines (AAL) Beats on Q2 Earnings, Cuts '18 View
American Airlines Group Inc.’s (AAL - Free Report) second-quarter 2018 earnings (excluding 41 cents from non-recurring items) of $1.63 per share surpassed the Zacks Consensus Estimate by 4 cents. Quarterly earnings decreased on a year-over-year basis mainly due to high fuel costs.
Revenues of $11,643 million fell short of the Zacks Consensus Estimate of $11,652 million. The top line, however, improved on a year-over-year basis. Strong demand for air travel led to the year over year improvement in the top line.
Total revenue per available seat miles (TRASM: a key measure of unit revenue) improved 2.1% to 15.97 cents in the reported quarter. Consolidated yield improved 1%. Passenger revenue per available seat miles (PRASM) improved 1.5%.
While traffic (measured by revenue passenger miles) was up 2%, capacity (measured by average seat miles) was up 1.6%. Consolidated load factor (percentage of seats filled by passengers) increased to 83.4% from 83% a year-ago as traffic growth outpaced capacity expansion in the second quarter of 2018.
Total operating expenses (on a reported basis) climbed 10.3% year over year to approximately $10,615 million primarily due to the rise in fuel costs. Expenses pertaining to salaries and benefits were up 1.8%. Consolidated operating costs per available seat miles (CASM: excluding fuel and special items) increased 2.4%.
During the quarter under review, this Zacks Rank #3 (Hold) company returned $396 million to shareholders through dividends and buybacks. Furthermore, the carrier also declared a dividend of 10 cents per share. The dividend will be paid on Aug 21, to the shareholders on Aug 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We are impressed by the company’s efforts to reward shareholders through stock repurchases and dividend payments. Meanwhile, the carrier deferred deliveries of 22 A321neo planes in a bid to spread out capital expenditures. The planes were previously scheduled for delivery in 2019, 2020 and 2021.
American Airlines Group Inc. Price, Consensus and EPS Surprise
American Airlines Group Inc. Price, Consensus and EPS Surprise | American Airlines Group Inc. Quote
Outlook
TRASM is expected to increase in the band of 1% to 3% in the third quarter of 2018. Pre-tax margin excluding special items is projected in the range of 5% to 7% in the third quarter. Consolidated jet fuel per gallon (including taxes) is projected in the band of $2.22 to $2.27 for the third quarter.
Adjusted earnings per share in 2018 are now expected between $4.50 and $5.00 (previous guidance had hinted at earnings between $5 and $6). The Zacks Consensus Estimate for 2018 earnings is currently pegged at $4.74 per share. Higher fuel costs led to the view being trimmed.
Consolidated CASM (excluding special items and fuel) is expected to increase 1% in the third quarter of 2018. The metric is also anticipated to increase approximately 1.5% in 2018. The metric is still expected to increase in the band of 1% to 2% in each of 2019 and 2020.
Capacity (system) in the third quarter is projected to increase 3.3% year over year. The metric is expected to increase 1.6% in the final quarter of 2018. Capacity in 2018 is expected to grow 2.2%, compared with 2.5% expected earlier.
Upcoming Releases
Investors interested in the broader Transportation Sector are awaiting second-quarter 2018 earnings reports from key players, namely Genesee & Wyoming Inc. , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) . Genesee & Wyoming will release results on Jul 27. C.H. Robinson and Expeditors will announce the same on Jul 31 and Aug 7 respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>