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Solid Q4 and Upbeat Guidance Offset Uncertainty as American Airlines Shares Move 6% Higher

By Daniel Miller - Updated Apr 22, 2019 at 2:11PM

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Here are the highlights from American Airlines' fourth-quarter results and what investors should consider.

What happened?

Shares of American Airlines Group (AAL 7.09%), an airline operator offering nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries, are trading 6% higher Thursday as of 10:57 a.m. EST after management released fourth-quarter results.

So what

Following solid reports from rivals Delta Air Lines and United Airlines earlier this month, American Airlines topped analysts' estimates for the fourth-quarter and released 2019 guidance that also topped forecasts. Total operating revenue increased 3.1% to $10.94 billion, and net income, excluding special items, jumped 8.3% to $481 million. That translated to $1.04 per share, which was good enough to top analysts' call for $1.01 per share. The solid results, despite prior warnings, were due to higher fares and stronger passenger demand, and they provide healthy momentum.

Airplane wing with aerial view of a valley.

Image source: Getty Images.

"We enter 2019 with great momentum. We are intent upon running the most reliable operation in our post-merger history, pursuing high margin growth opportunities at our most profitable hubs, and executing on a number of valuable revenue and cost saving initiatives," said Chairman and CEO Doug Parker in a press release.

Now what

Looking ahead, management expects total revenue per available seat mile to grow faster than that of its network competitors. At the midpoint of its 2019 guidance, earnings per share would increase roughly 40% compared to 2018.

Despite the upbeat guidance, investors have to consider the uncertainty surrounding the government shutdown, which could send ripple effects throughout the industry. Southwest Airlines noted the shutdown had knocked between $10 million and $15 million off its January revenue, as airlines saw the hiatus impacting 0- to 14-day bookings.

Fortunately, if the government can rectify its situation, airlines should have less concern about slowing global economic growth, and that's good news on top of solid fourth-quarter results.

Check out the latest American Airlines Group earnings call transcript.

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American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
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