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American Airlines (AAL) Gains on Q4 Earnings & Revenue Beat
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American Airlines' (AAL - Free Report) fourth-quarter 2020 loss puts it in the same bracket of Alaska Air Group (ALK - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) as all suffered a similar setback.
The airline incurred a loss (excluding 5 cents from non-recurring items) of $3.86 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $3.92. However, the company delivered earnings per share of $1.15 in the year-ago quarter.
Operating revenues of $4,027 million slumped 64.4% year over year but surpassed the Zacks Consensus Estimate of $3,859.2 million. The narrower-than-expected loss and the revenue beat pleased investors. As an evidence, the stock soared above 25% in pre-market trading.
American Airlines Group Inc. Price, Consensus and EPS Surprise
Passenger revenues, which accounted for bulk of the top line (79.2%), plunged 69.2% to $3,190 million. Cargo revenues surged 32% to $285 million, driven by the carrier’s focus on its cargo unit in the face of dwindling passenger revenues. Cargo yield per ton mile jumped 82.2% in the final quarter of 2020. Other revenues dropped 26.5%.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 24.7% year over year to 12.12 cents in the reported quarter on a consolidated basis. Further, passenger revenue per available seat miles (PRASM) fell 34.8% to 9.60 cents in the period. Moreover, consolidated yield was down 14.7%.
While consolidated traffic (measured in revenue passenger miles) plummeted 63.8%, capacity (measured in average seat miles) contracted 52.7%. Consolidated load factor (percentage of seats filled by passengers) decreased 19.7 percentage points to 64.1% as traffic decline was more than the capacity reduction.
Total operating costs (on a reported basis) declined 38.2% year over year to $6,542 million with expenses pertaining to aircraft fuel and related taxes tumbling 71.6%. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) shot up 51.8% to 17.59 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 50.6%. Average fuel price per gallon (including related taxes) also fell 38.2% to $1.27.
Other Details
Driven by its cost-control initiatives, American Airlines, carrying a Zacks Rank #3 (Hold) currently, succeeded in reducing its daily cash burn rate from nearly $100 million in April 2020 to approximately $30 million in the December quarter. Also, it exited the fourth quarter with available liquidity of $14.3 billion. The carrier expects to end the first quarter of 2021with total available liquidity of roughly $15 billion.
Moreover, American Airlines expects system capacity for the March quarter to nosedive 45% from the figure reported in first-quarter 2019. Total revenues in the first quarter of 2021 are anticipated to decline in the 60-65% range.
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American Airlines (AAL) Gains on Q4 Earnings & Revenue Beat
American Airlines' (AAL - Free Report) fourth-quarter 2020 loss puts it in the same bracket of Alaska Air Group (ALK - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) as all suffered a similar setback.
The airline incurred a loss (excluding 5 cents from non-recurring items) of $3.86 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $3.92. However, the company delivered earnings per share of $1.15 in the year-ago quarter.
Operating revenues of $4,027 million slumped 64.4% year over year but surpassed the Zacks Consensus Estimate of $3,859.2 million. The narrower-than-expected loss and the revenue beat pleased investors. As an evidence, the stock soared above 25% in pre-market trading.
American Airlines Group Inc. Price, Consensus and EPS Surprise
American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote
Passenger revenues, which accounted for bulk of the top line (79.2%), plunged 69.2% to $3,190 million. Cargo revenues surged 32% to $285 million, driven by the carrier’s focus on its cargo unit in the face of dwindling passenger revenues. Cargo yield per ton mile jumped 82.2% in the final quarter of 2020. Other revenues dropped 26.5%.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 24.7% year over year to 12.12 cents in the reported quarter on a consolidated basis. Further, passenger revenue per available seat miles (PRASM) fell 34.8% to 9.60 cents in the period. Moreover, consolidated yield was down 14.7%.
While consolidated traffic (measured in revenue passenger miles) plummeted 63.8%, capacity (measured in average seat miles) contracted 52.7%. Consolidated load factor (percentage of seats filled by passengers) decreased 19.7 percentage points to 64.1% as traffic decline was more than the capacity reduction.
Total operating costs (on a reported basis) declined 38.2% year over year to $6,542 million with expenses pertaining to aircraft fuel and related taxes tumbling 71.6%. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) shot up 51.8% to 17.59 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 50.6%. Average fuel price per gallon (including related taxes) also fell 38.2% to $1.27.
Other Details
Driven by its cost-control initiatives, American Airlines, carrying a Zacks Rank #3 (Hold) currently, succeeded in reducing its daily cash burn rate from nearly $100 million in April 2020 to approximately $30 million in the December quarter. Also, it exited the fourth quarter with available liquidity of $14.3 billion. The carrier expects to end the first quarter of 2021with total available liquidity of roughly $15 billion.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, American Airlines expects system capacity for the March quarter to nosedive 45% from the figure reported in first-quarter 2019. Total revenues in the first quarter of 2021 are anticipated to decline in the 60-65% range.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>