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The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 19.2%. However, the consensus estimate for third-quarter earnings has been revised 63% downward over the past 60 days.
Given this backdrop, let's delve deeper into the factors likely to have influenced AAL’s third-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, strengthening total revenues. Our estimate for passenger revenues is pegged at $12.47 billion, indicating a marginal rise year over year.
Driven by the uptick, AAL expects third-quarter 2023 adjusted operating margin in the range of 8-10%. Our estimate is pegged at 8.6%. The carrier projects total revenue per available seat miles (a measure of unit revenue) to be between 4.5% and 6.5%, lower than third-quarter 2022 actuals. Our estimate hints at a 4.1% rise.
Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the September quarter. The Zacks Consensus Estimate is pegged at 83.4%.
American Airlines Group Inc. Price and EPS Surprise
However, high fuel costs might have affected the bottom-line performance in the quarter under review. Fuel cost per gallon is projected in the range of $2.55-$2.65 for third-quarter 2023. Even though fuel price has come down from the highs witnessed earlier, it still remains elevated.
With the pandemic coming to an end, cargo revenues are on the wane. Evidently, cargo revenues declined 39.2% year over year in the first half of 2023. Cargo yield per ton mile dipped 25.8% in the first six months of 2023. We estimated the metric to fall 11.2% year over year.
AAL projects third-quarter earnings per share (excluding net special items) in the 85-95 cents range. The midpoint of the revised guidance (90 cents) is way higher than the Zacks Consensus Estimate of 33 cents.
What Our Model Says
Our proven model does not predict 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. This is absolutely not the case here. 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 +0.00% (the Most Accurate Estimate is in line with the Zacks Consensus Estimate of 33 cents) and presently carries a Zacks Rank #3.
Highlights of Q2
American Airlines’ second-quarter 2023 earnings (excluding 4 cents from non-recurring items) of $1.92 per share easily beat the Zacks Consensus Estimate of $1.58. In the year-ago quarter, AAL reported earnings of 76 cents as air-travel demand was not so robust back then.
Operating revenues of $14,055 million jumped 4.7% year over year. The top line surpassed the Zacks Consensus Estimate of $13,736.3 million.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
ODFL is scheduled to report third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for earnings has been revised 2.91% upward over the last 60 days. ODFL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3.86%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +6.52% and a Zacks Rank #2. KEX is slated to report third-quarter 2023 earnings on Oct 26.
The Zacks Consensus Estimate for third-quarter 2023 earnings has remained flat over the last seven days. KEX has a stellar earnings surprise history, having outshined the Zacks Consensus Estimate in each of the preceding four quarters by an average of 8.03%.
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What's in Store for American Airlines (AAL) in Q3 Earnings?
American Airlines (AAL - Free Report) is scheduled to report third-quarter 2023 results on Oct 19, before market open.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 19.2%. However, the consensus estimate for third-quarter earnings has been revised 63% downward over the past 60 days.
Given this backdrop, let's delve deeper into the factors likely to have influenced AAL’s third-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, strengthening total revenues. Our estimate for passenger revenues is pegged at $12.47 billion, indicating a marginal rise year over year.
Driven by the uptick, AAL expects third-quarter 2023 adjusted operating margin in the range of 8-10%. Our estimate is pegged at 8.6%. The carrier projects total revenue per available seat miles (a measure of unit revenue) to be between 4.5% and 6.5%, lower than third-quarter 2022 actuals. Our estimate hints at a 4.1% rise.
Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the September quarter. The Zacks Consensus Estimate is pegged at 83.4%.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
However, high fuel costs might have affected the bottom-line performance in the quarter under review. Fuel cost per gallon is projected in the range of $2.55-$2.65 for third-quarter 2023. Even though fuel price has come down from the highs witnessed earlier, it still remains elevated.
With the pandemic coming to an end, cargo revenues are on the wane. Evidently, cargo revenues declined 39.2% year over year in the first half of 2023. Cargo yield per ton mile dipped 25.8% in the first six months of 2023. We estimated the metric to fall 11.2% year over year.
AAL projects third-quarter earnings per share (excluding net special items) in the 85-95 cents range. The midpoint of the revised guidance (90 cents) is way higher than the Zacks Consensus Estimate of 33 cents.
What Our Model Says
Our proven model does not predict 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. This is absolutely not the case here. 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 +0.00% (the Most Accurate Estimate is in line with the Zacks Consensus Estimate of 33 cents) and presently carries a Zacks Rank #3.
Highlights of Q2
American Airlines’ second-quarter 2023 earnings (excluding 4 cents from non-recurring items) of $1.92 per share easily beat the Zacks Consensus Estimate of $1.58. In the year-ago quarter, AAL reported earnings of 76 cents as air-travel demand was not so robust back then.
Operating revenues of $14,055 million jumped 4.7% year over year. The top line surpassed the Zacks Consensus Estimate of $13,736.3 million.
Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings.
Old Dominion Freight Line (ODFL - Free Report) has an Earnings ESP of +0.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ODFL is scheduled to report third-quarter 2023 earnings on Oct 25. The Zacks Consensus Estimate for earnings has been revised 2.91% upward over the last 60 days. ODFL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark on the other occasion), the average beat being 3.86%.
Kirby Corporation (KEX - Free Report) has an Earnings ESP of +6.52% and a Zacks Rank #2. KEX is slated to report third-quarter 2023 earnings on Oct 26.
The Zacks Consensus Estimate for third-quarter 2023 earnings has remained flat over the last seven days. KEX has a stellar earnings surprise history, having outshined the Zacks Consensus Estimate in each of the preceding four quarters by an average of 8.03%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.