American Airlines Group saw its shares advance 3.5% on Thursday after the carrier provided a more favorable view of its first-quarter results, saying it now expects an adjusted loss per share toward the lower bound of a previously disclosed range.
The Fort Worth, Texas-based airline maintained that adjusted losses for the first quarter are expected to land between $0.10 and $0.50 per share, and said current expectations are for results to fall at the low end of that span. That internal outlook compares to the Bloomberg consensus estimate, which stands at a $0.44 loss per share.
Alongside the narrower loss expectation, American Airlines lifted its revenue projection for the quarter. The company now forecasts total revenue growth of more than 10% for the period, up from its prior guidance of approximately 7% to 10% growth.
Capacity guidance was unchanged in tone but clarified: the airline expects available seat miles, a common industry capacity metric, to rise roughly 3% to 4% in the first quarter. That planned increase in seat supply accompanies the company9s higher revenue-growth outlook.
Fuel assumptions were revised as well. American Airlines updated its jet fuel cost view and said it is expecting jet fuel prices to be $2.75 per gallon during the first quarter. That updated cost assumption was provided as part of the company9s refreshed set of first-quarter operating expectations.
Market reaction and context
Investors responded positively to the combination of a narrowed loss outlook and a stronger revenue-growth projection, which together helped lift the stock on Thursday. The company9s simultaneous update to capacity and fuel-cost assumptions provided additional detail on the operational and cost foundations underlying the new guidance.
Key takeaways
- American Airlines now anticipates an adjusted first-quarter loss per share at the low end of a $0.10 to $0.50 range, versus a Bloomberg consensus of a $0.44 loss.
- The carrier raised its first-quarter revenue-growth target to greater than 10%, up from about 7% to 10% previously.
- Capacity is expected to grow modestly, with available seat miles projected to increase about 3% to 4% in the quarter.
Risks and uncertainties
- Actual results could still fall anywhere within the $0.10 to $0.50 adjusted loss range, leaving material variation in outcomes for shareholders - this directly affects the airline and broader travel sectors.
- Fuel-cost assumptions are a sensitivity point - the company9s expectation of $2.75 per gallon for jet fuel factors into results but is subject to market volatility, impacting airline operating margins and energy-linked markets.
- Meeting the raised revenue-growth target depends on execution versus the company9s capacity plans and demand conditions; shortfalls would affect airline revenue and related sectors such as travel and consumer discretionary.