American Airlines shares gained more than 5% during premarket trading after the carrier forecast a rise in profit for the fourth quarter due to strong travel demand from consumers during the holiday season. This comes as welcome news after a period when a deteriorating consumer outlook derived from rising inflation threatened consumer demand.
The airline expects a fourth quarter adjusted earnings per diluted share between $1.12 and $1.17, thus significantly exceeding analysts’ prior expectations of 60 cents per share. American Airlines has also projected its revenue for the quarter to rise by 16% to 17% from the fourth quarter of 2019, before the outbreak of the COVID pandemic. This is a rise from the 11% to 13% growth that the airline initially forecasted.
For American Airlines, a rise in profit will be an especially positive result given the challenges that faced players in the air travel industry. Faced by an industry-wide pilot shortage that made it more challenging for airlines to capitalize on the surge in demand, American Airlines was down in capacity by 6.1% versus the fourth quarter of 2019.
Along with its rising revenue, American Airlines also expects its costs excluding fuel to be up by about 10% for the fourth quarter.