American Airlines beats profit estimates, sees steady holiday bookings

Reuters

Published Oct 19, 2023 07:09AM ET

Updated Oct 19, 2023 11:38AM ET

By Shivansh Tiwary

(Reuters) - American Airlines (NASDAQ:AAL) on Thursday beat estimates for third-quarter adjusted profit and said bookings for the upcoming holiday season have been steady, sending its shares up nearly 5% in morning trading.

U.S. airlines with international operations are seeing relentless demand for long-haul flights as a stronger dollar encourages more Americans to plan holidays abroad.

"Domestic demand remains steady, while international demand continues to drive revenue growth led by the Atlantic, Caribbean and Central America," Chief Executive Officer Robert Isom said during the company's earnings call.

American Airlines reported an adjusted profit of 38 cents per share for the quarter ended Sept. 30, beating analysts' average estimate of 25 cents, according to LSEG data.

However, the Fort Worth, Texas-based company cut its forecast for the year as it grapples with higher expenses.

Jet fuel prices increased in the quarter through September due to tight oil supplies, raising operational costs for carriers.

American Airlines now expects an adjusted profit of $2.25 to $2.50 per share for the year, compared with its previous forecast of $3 to $3.75.

The airline had warned in August that third-quarter costs would rise following a new labor deal with its pilots that included more than $9.6 billion in total pay and benefits increase over four years.

Several carriers have recently handed out costly contracts to retain workers.

"We expect the pilot shortage to persist for at least another two years, so cost discipline will remain critical in the years to come," said Christopher Raite, senior analyst at Third Bridge.