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American Airlines hikes revenue estimates after strong Q4

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American Airlines shares surged Thursday after the carrier hiked its revenue and profit estimates for the fourth quarter due to strong demand and high fares.

American stock gained nearly 10% to $16.83, its highest closing price since June and much outpacing other airlines’ shares, which also rallied. American Airlines was the day’s biggest gainer within the S&P 500.

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American said in a securities filing it estimates revenue rose as much as 17% over the identical period in 2019, up from a previous forecast of an 11% to 13% increase compared with the period three years earlier, before the Covid pandemic.

American said revenue per seat mile likely climbed 24% above the 2019 quarter, higher than its prior forecast of 18% to twenty%.

It expects to report adjusted earnings per share of between $1.12 and $1.17, up from its previous estimate of between 50 cents and 70 cents.

The update Thursday is the primary indication of how a significant airline coped with a rocky end of the yr, when severe weather sparked mass cancellations across the U.S. in the course of the busy holiday travel season. American is scheduled to report full results on Jan. 26. Delta Air Lines is about to announce quarterly results Friday morning.

American’s recent CFO, Devon¬†May, who began in that role Jan. 1, told CNBC that bookings are currently coming in as expected.

The Fort Value, Texas-based airline forecast a ten% increase in unit costs, excluding fuel.

High costs, staffing issues and aircraft delivery delays have eaten into airline profits over the past yr.

“The No. 1 thing is to get aircraft utilization back to historical levels,” May said, adding that the carrier is getting near that in its mainline operation, though it’s harder on regional partners, where pilot shortages are more acute.

Other carriers are also in search of ways to cut back expenses. For instance, JetBlue Airways earlier this week told pilots to attempt to conserve fuel by taxiing with a single engine and hooking as much as ground power quickly to cut back reliance on auxiliary power systems. It even suggested crews pack light.

Cutting aircraft weight by 30 kilos per flight could save $1 million a yr, JetBlue told pilots Tuesday.

“It could appear silly, but what we pack matters,” JetBlue said in a pilot memo, which was seen by CNBC. “While all of us have essential items we’d like while traveling, it is important to pack what you would like and leave home what you do not.”

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