American Airlines Group Inc. (AAL - Free Report) reported better-than-expected earnings in the second quarter of 2016. The company posted adjusted earnings per share of $1.77, beating the Zacks Consensus Estimate by 12 cents. However, quarterly earnings declined over 32% on a year-over-year basis.
American Airlines reported operating revenues of $10.36 billion in the second quarter, representing a 4.3% decrease from the figure reported a year ago. Quarterly revenues however beat the Zacks Consensus Estimate of $10.31 billion.
Consolidated passenger revenue per available seat mile (PRASM) declined 6.3% to 12.71 cents in the reported quarter. Consolidated yield fell 5.3% to 15.42 cents. Traffic grew 0.9% on a 1.9% capacity expansion. Consolidated load factor (% of seats filled by passengers) also declined as traffic growth was outpaced by capacity expansion. Load factor deteriorated to 82.5% from the comparable year-ago figure of 83.3%.
American Airlines’ results in the second quarter of 2016 benefited from low fuel costs. This is because fuel accounts for a major chunk of an airline's operating expenses. Total operating expenses declined significantly to $8.6 billion on the back of a 24.9% reduction in fuel costs. We note that the carrier does not hedge fuel costs.
During the second quarter, the company returned more than $1.7 billion to its shareholders through the payment of $58 million in dividends and buyback of shares worth of $1.7 billion. Furthermore, the carrier declared a dividend of $0.10 per share which will be paid on Aug 19, 2016, to the shareholders on record as of Aug 5. We are impressed with the company’s efforts to reward shareholders through stock repurchases and dividend payments.
American Airlines is constantly looking to introduce new aircraft and retire old ones from its fleet. Keeping with its aim to modernize its fleet, the carrier took delivery of 14 new mainline aircraft and 14 regional ones during the reported quarter, while retiring 31 aircraft. The carrier invested $1.2 billion toward new aircraft during the quarter.
Zacks Rank & Key Picks
Currently, American Airlines Group has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the broader transportation space are Cathay Pacific Airways Limited (CPCAY - Free Report) , ANA Holdings Inc. (ALNPY - Free Report) and LATAM Airlines Group S.A. . Cathay Pacific sports a Zacks Rank #1 (Strong Buy) while ANA Holdings and LATAM Airlines carry a Zacks Rank #2 (Buy).
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American Airlines Group Inc. (AAL - Free Report) reported better-than-expected earnings in the second quarter of 2016. The company posted adjusted earnings per share of $1.77, beating the Zacks Consensus Estimate by 12 cents. However, quarterly earnings declined over 32% on a year-over-year basis.
American Airlines reported operating revenues of $10.36 billion in the second quarter, representing a 4.3% decrease from the figure reported a year ago. Quarterly revenues however beat the Zacks Consensus Estimate of $10.31 billion.
Consolidated passenger revenue per available seat mile (PRASM) declined 6.3% to 12.71 cents in the reported quarter. Consolidated yield fell 5.3% to 15.42 cents. Traffic grew 0.9% on a 1.9% capacity expansion. Consolidated load factor (% of seats filled by passengers) also declined as traffic growth was outpaced by capacity expansion. Load factor deteriorated to 82.5% from the comparable year-ago figure of 83.3%.
American Airlines’ results in the second quarter of 2016 benefited from low fuel costs. This is because fuel accounts for a major chunk of an airline's operating expenses. Total operating expenses declined significantly to $8.6 billion on the back of a 24.9% reduction in fuel costs. We note that the carrier does not hedge fuel costs.
During the second quarter, the company returned more than $1.7 billion to its shareholders through the payment of $58 million in dividends and buyback of shares worth of $1.7 billion. Furthermore, the carrier declared a dividend of $0.10 per share which will be paid on Aug 19, 2016, to the shareholders on record as of Aug 5. We are impressed with the company’s efforts to reward shareholders through stock repurchases and dividend payments.
American Airlines is constantly looking to introduce new aircraft and retire old ones from its fleet. Keeping with its aim to modernize its fleet, the carrier took delivery of 14 new mainline aircraft and 14 regional ones during the reported quarter, while retiring 31 aircraft. The carrier invested $1.2 billion toward new aircraft during the quarter.
Zacks Rank & Key Picks
Currently, American Airlines Group has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the broader transportation space are Cathay Pacific Airways Limited (CPCAY - Free Report) , ANA Holdings Inc. (ALNPY - Free Report) and LATAM Airlines Group S.A. . Cathay Pacific sports a Zacks Rank #1 (Strong Buy) while ANA Holdings and LATAM Airlines carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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