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American Airlines (AAL) Tops Q2 Earnings, Revenue Estimates

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American Airlines Group Inc.’s (AAL - Free Report) second-quarter 2017 earnings (adjusted) of $1.92 per share surpassed the Zacks Consensus Estimate by 5 cents. Moreover, quarterly earnings improved 8.47% on a year-over-year basis. Results were aided by higher revenues.

Revenues of $11,105 million also improved 7.16% from the year-ago figure. Quarterly revenues edged past the Zacks Consensus Estimate of $11,086.7 million. Strong demand for air travel coupled with improving yields drove the top line in the quarter under review.

Total revenue per available seat miles (TRASM: a key measure of unit revenue) improved 5.7% to 15.48 cents in the reported quarter. In fact, this quarter marked the third successive one in which the metric grew on a year-over-year basis, since the fourth quarter of 2014.

Consolidated yield improved 4.3% to 16.1 cents. Passenger revenue per available seat miles improved 5% to 13.36 cents. While traffic (measured by revenue passenger miles) was up 2.1%, capacity (measured by average seat miles) was up 1.4%. In fact, consolidated load factor (percentage of seats filled by passengers) improved as traffic growth outpaced capacity expansion. Load factor improved to 83% compared with 82.5% a year ago.

Total operating expenses climbed 11.1% year over year to $9.6 billion primarily backed by rise in fuel costs. Expenses pertaining to salaries and benefits were up 12.5%. Consolidated operating costs per available seat miles (CASM: excluding special items) increased 6.8%.

During the quarter, this Zacks Rank #1 (Strong Buy) company returned $500 million billion to its shareholders through the payment of $50 million in dividends and buyback of shares worth $450 million. Furthermore, the carrier declared a dividend of 10 cents per share that will be paid on Aug 28 to shareholders of record as of Aug 14.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Notably, the carrier has returned more than $10.7 billion to stockholders through share repurchases and dividends since mid-2014. Additionally, the company’s efforts to reward shareholders through stock repurchase and dividend payments are impressive.

Meanwhile, it remains focused on introducing new aircraft and retiring old ones from its fleet. In fact, keeping in with its aim to modernize its fleet, the carrier took delivery of 16 new mainline aircraft and four regional ones during the second quarter of 2017. Also, the company invested $1.1 billion toward a new aircraft during the reported quarter. Going forward, it aims to shell out $4.1 billion in 2017 for the same purpose.

American Airlines Group, Inc. Price, Consensus and EPS Surprise

 

American Airlines Group, Inc. Price, Consensus and EPS Surprise | American Airlines Group, Inc. Quote

Outlook

Total revenue per available seat miles (TRASM) is expected to increase in the band of 0.5% to 2.5% for the third quarter of 2017 on a year-over-year basis. Pre-tax margin, excluding special items, is projected in the range of 10% to 12%. Consolidated CASM (excluding special items and fuel) is expected to increase 5%. The metric is also anticipated to increase approximately 5% in 2017. Capacity (system) in 2017 is projected to increase 1.5%.

Upcoming Releases

Investors interested in the broader Transportation space are keenly waiting for second-quarter earnings reports from key players like GOL Linhas (GOL - Free Report) , Copa Holdings, S.A. (CPA - Free Report) and Air Lease Corp. (AL - Free Report) . While GOL Linhas and Copa Holdings will report second-quarter results on Aug 9, Air Lease will report the same on Aug 3.

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