American Airlines Group Inc. (AAL - Free Report) has reported traffic figures for August, registering a 3.7% rise, measured in revenue passenger miles (RPMs), to 21.19 billion from 20.44 billion, reported a year ago.
On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) expanded 3.2% to 25.45 billion. Also, load factor or percentage of seats filled by passengers inched up 83.3% from 82.9% in August 2016 as traffic growth outpaced capacity expansion.
On a year-to-date basis, the carrier lodged a 0.9% increase in RPMs to 153.64 billion, while ASMs nudged up 0.8% to 187.51 billion, both on a year-over-year basis. However, load factor remained flat year over year at 81.9%. Plus, passenger count improved 2.3% in August. However, the same slipped 0.4% on a year-to-date basis.
Below-Par Third-Quarter Outlook
American Airlines has trimmed guidance for the third quarter due to recent devastating impact of Irma. The hurricane has resulted in closures at 40 airports in Florida as well as the Caribbean, besides the company’s hub, Miami International Airport. It has also led to more than 5,000 flight cancellations.
The company now anticipates third-quarter 2017 total revenue per available seat mile (TRASM) in the range of flat to up 1% year over year. Previous outlook had called for a 0.5-2.5% rise in the metric.
Due to higher fuel costs for the quarter, the company currently estimates third-quarter 2017 pre-tax margin excluding special items, to vary between 8.5-10.5%. Prior view was in the range of 10-12%.
However, the carrier still believes its fourth-quarter TRASM-growth to surpass the third-quarter figure.
Zacks Rank & Key Picks
American Airlines currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in airline space are Deutsche Lufthansa AG (DLAKY - Free Report) , Air France-KLM SA (AFLYY - Free Report) and SkyWest, Inc. (SKYW - Free Report) . While Deutsche Lufthansa sports a Zacks Rank #1 (Strong Buy), Air France-KLM and SkyWest carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Deutsche Lufthansa and Air France-KLM have soared more than 100% in a year, while SkyWest shares have surged 41.4% over the same time frame.
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