American Airlines’ AAL fourth-quarter 2019 earnings (excluding 20 cents from non-recurring items) of $1.15 per share matched the Zacks Consensus Estimate. However, the bottom line improved 10.6% on a year-over-year basis, backed by low fuel costs.
Operating revenues of $11,313 million increased 3.4% year over year and also marginally beat the Zacks Consensus Estimate of $11,308.3 million. Higher passenger revenues drove the top line.
Passenger revenues, which accounted for bulk of the top line (91.5%), increased 3.9% owing to strong demand for air travel. But cargo revenues declined 18.3% to $216 million, mainly due to a 15.6% reduction in cargo ton miles. Other revenues increased 5.4%.
Total revenue per available seat miles (TRASM: a key measure of unit revenues) inched up 0.5% to 16.1 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) increased 0.9% to 14.72 cents in the fourth quarter. However, consolidated yield dipped 2%.
While traffic (measured by revenue passenger miles) was up 6%, capacity (measured by average seat miles) expanded 2.9%. Consolidated load factor (percentage of seats filled by passengers) increased 240 basis points to 83.8% as traffic growth outpaced capacity expansion.
Total operating costs (on a reported basis) were up 2.1% year over year to $10,584 million with expenses pertaining to salaries, wages and benefits rising 3%. Consolidated operating costs per available seat miles (CASM: excluding fuel and special items) increased 2% to 11.59 cents. However, CASM (including fuel and special items) declined 0.8% Average fuel cost per gallon (on a consolidated basis: including taxes) declined 8.7% to $2.05.
American Airlines currently has 24 Boeing 737 MAX jets in its fleet, which are grounded since March 2019. Notably, American Airlines canceled roughly 10,000 flights in the final quarter of 2019. The carrier currently expects its Boeing 737 MAX jets to be grounded through Jun 3, 2020.