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American Airlines' July Load Factor Falls, Stock Declines

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Premier passenger carrier, American Airlines Group Inc. (AAL - Free Report) witnessed a 0.8% rise in traffic, measured in revenue passenger miles (RPMs), to 21.9 billion from 21.7 billion reported a year ago.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 1.9% to 26.0 billion.  However, the load factor or percentage of seats filled by passengers decreased to 84.3% from 85.2% in Jul 2016 as capacity expansion outpaced traffic growth. This decline in load factor seems to have disappointed investors. Consequently, the stock fell 1.20% to $49.40 at the close of business on Aug 9.

On a year-to-date basis, the carrier registered a 0.5% year-over-year rise in RPMs to 132.4 billion. ASMs rose by the same clip to 162.0 billion. Hence, load factor remained flat at 81.7%. Also, passenger count (PAX) reduced 1.5% and 0.8% respectively, in July and during the first seven months of 2017.

The company maintains its projection for the third quarter of 2017. The company expects total revenue per available seat mile (TRASM) growth in the band 0.5-2.5% year over year. Additionally, Pre-tax margin (excluding special items) in the third quarter is estimated in the range of 10-12%.

This Zacks Rank #3 (Hold) company recently reported second-quarter 2017 results, beating the Zacks Consensus Estimate for both earnings and revenues. The carrier’s adjusted earnings of $1.92 per share surpassed the Zacks Consensus Estimate by 5 cents. Results were also aided by higher revenues. Revenues of $11,105 million 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Airline heavyweights like Southwest Airlines (LUV - Free Report) , Spirit Airlines (SAVE - Free Report) and Alaska Air Group (ALK - Free Report) have also reported their financial numbers over the past few weeks.

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