American Airlines raises fourth-quarter unit revenue forecast

Reuters

Published Dec 09, 2016 10:36AM ET

American Airlines raises fourth-quarter unit revenue forecast

(Reuters) - American Airlines Group Inc (O:AAL) said higher average fares per mile have boosted its revenue and profit expectations for the fourth quarter, a day after rival United Continental Holdings Inc (N:UAL) also raised forecasts.

Shares of top U.S. airlines rose on Friday, with American's up 4 percent and United's up 4.2 percent.

American, the world's largest airline, said on Friday it expects fourth-quarter unit revenue to range between a decline of 1 percent and an increase of 1 percent, compared with its previous forecast of a decline of 2.5 percent to 0.5 percent.

Unit revenue compares sales to how many seats an airline flies and how far it flies them.

The airline now expects pre-tax margin excluding items to be between 6 percent and 8 percent, up from its previous range of 5 percent to 7 percent.

United, the No. 3 U.S. airline by passenger traffic, also forecast on Thursday a higher profit margin in the fourth quarter as bookings strengthened and expenses related to employment benefits were lower than expected.

"United provided a solid upward guide to Q4 expectations last night, pushing consensus close the level where we initially began the quarter," JPMorgan (NYSE:JPM) analyst Jamie Baker said in a research note on Friday.