We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missed once), the average beat being 12.9%. The Zacks Consensus Estimate for second-quarter earnings has been revised 32.56% upward over the past 60 days.
Given this backdrop, let's delve deeper into the factors that are likely to have influenced AAL’s second-quarter 2023 performance.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter.
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting total revenues. Our estimate for passenger revenues is pegged at $12.52 billion, indicating a 2.5% rise year over year.
Driven by the uptick, AAL expects second-quarter 2023 adjusted operating margin in the range of 12.5-14.5%. Our estimate is pegged at 12.9%. The carrier projects total revenue per available seat miles (a measure of unit revenue) to decline 1-3% from second-quarter 2022 actuals. Our estimate hints at a 2.9% decline.
Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the June quarter. The Zacks Consensus Estimate is pegged at 85%.
However, high fuel cost might have affected the bottom-line performance in the quarter under review. Fuel cost per gallon in second-quarter 2023 is anticipated in the $2.55-$2.65 band. Our estimate is pegged at $2.61. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level.
Non-fuel unit costs are likely to increase 3.5-5.5%. Our estimate hints at a 4.1% increase. High labor costs are likely to have pushed up the non-fuel unit costs in the to-be-reported quarter. Our estimate for expenses on salaries, wages and benefits indicates a 10.4% increase from second-quarter 2022 actuals.
AAL projects adjusted earnings per share (excluding net special items) to be between $1.45 and $1.65. The mid-point of the revised guidance ($1.55) is lower than the Zacks Consensus Estimate of $1.71.
What Our Model Says
Our proven model predicts an earnings beat for AAL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Airlines has an Earnings ESP of +2.69% (the Most Accurate Estimate is pegged at $1.76 per share at present, higher than the Zacks Consensus Estimate by 5 cents) and presently carries a Zacks Rank #3.
Highlights of Q1
American Airlines’ first-quarter 2023 earnings (excluding 3 cents from non-recurring items) of 5 cents per share surpassed the Zacks Consensus Estimate by a penny despite higher costs. In the year-ago quarter, AAL incurred a loss of $2.32 per share. Operating revenues of $12,189 million increased 37% year over year, reflecting upbeat air-travel demand. However, the top line missed the Zacks Consensus Estimate of $12,198.9 million.
Other Stocks to Consider
Here are a few other stocks from the Zacks Airline industry that investors may also consider, as our model shows that these too have the right combination of elements to beat on their second-quarter 2023 earnings.
Given the buoyant scenario with respect to air-travel demand, passenger revenues are likely to have been high, in turn, aiding UAL’s results. The Zacks Consensus Estimate for second-quarter earnings has been revised 6.91% upward over the past 60 days.
JetBlue Airways (JBLU - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #3. JBLU will release results on Aug 1.
We expect upbeat air-travel demand to aid JBLU’s results too. The Zacks Consensus Estimate for second-quarter earnings has been revised 11.11% upward over the past 60 days.
Image: Bigstock
Is a Beat in Store for American Airlines (AAL) in Q2 Earnings?
American Airlines (AAL - Free Report) is scheduled to report second-quarter 2023 results on Jul 20 before market open.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missed once), the average beat being 12.9%. The Zacks Consensus Estimate for second-quarter earnings has been revised 32.56% upward over the past 60 days.
Given this backdrop, let's delve deeper into the factors that are likely to have influenced AAL’s second-quarter 2023 performance.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter.
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting total revenues. Our estimate for passenger revenues is pegged at $12.52 billion, indicating a 2.5% rise year over year.
Driven by the uptick, AAL expects second-quarter 2023 adjusted operating margin in the range of 12.5-14.5%. Our estimate is pegged at 12.9%. The carrier projects total revenue per available seat miles (a measure of unit revenue) to decline 1-3% from second-quarter 2022 actuals. Our estimate hints at a 2.9% decline.
Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the June quarter. The Zacks Consensus Estimate is pegged at 85%.
However, high fuel cost might have affected the bottom-line performance in the quarter under review. Fuel cost per gallon in second-quarter 2023 is anticipated in the $2.55-$2.65 band. Our estimate is pegged at $2.61. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level.
Non-fuel unit costs are likely to increase 3.5-5.5%. Our estimate hints at a 4.1% increase. High labor costs are likely to have pushed up the non-fuel unit costs in the to-be-reported quarter. Our estimate for expenses on salaries, wages and benefits indicates a 10.4% increase from second-quarter 2022 actuals.
AAL projects adjusted earnings per share (excluding net special items) to be between $1.45 and $1.65. The mid-point of the revised guidance ($1.55) is lower than the Zacks Consensus Estimate of $1.71.
What Our Model Says
Our proven model predicts an earnings beat for AAL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Airlines has an Earnings ESP of +2.69% (the Most Accurate Estimate is pegged at $1.76 per share at present, higher than the Zacks Consensus Estimate by 5 cents) and presently carries a Zacks Rank #3.
Highlights of Q1
American Airlines’ first-quarter 2023 earnings (excluding 3 cents from non-recurring items) of 5 cents per share surpassed the Zacks Consensus Estimate by a penny despite higher costs. In the year-ago quarter, AAL incurred a loss of $2.32 per share. Operating revenues of $12,189 million increased 37% year over year, reflecting upbeat air-travel demand. However, the top line missed the Zacks Consensus Estimate of $12,198.9 million.
Other Stocks to Consider
Here are a few other stocks from the Zacks Airline industry that investors may also consider, as our model shows that these too have the right combination of elements to beat on their second-quarter 2023 earnings.
United Airlines (UAL - Free Report) has an Earnings ESP of +3.89% and a Zacks Rank #3. UAL will release results on Jul 19. You can see the complete list of today’s Zacks #1 Rank stocks here.
Given the buoyant scenario with respect to air-travel demand, passenger revenues are likely to have been high, in turn, aiding UAL’s results. The Zacks Consensus Estimate for second-quarter earnings has been revised 6.91% upward over the past 60 days.
JetBlue Airways (JBLU - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #3. JBLU will release results on Aug 1.
We expect upbeat air-travel demand to aid JBLU’s results too. The Zacks Consensus Estimate for second-quarter earnings has been revised 11.11% upward over the past 60 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.