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American Airlines (AAL) Beats on Q3 Earnings, Cuts FY23 View
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American Airlines’ (AAL - Free Report) third-quarter 2023 earnings (excluding $1.21 from non-recurring items) of 38 cents per share easily beat the Zacks Consensus Estimate of 26 cents. Results were aided by higher revenues driven by the buoyant air-travel-demand scenario. In the year-ago quarter, AAL reported earnings of 69 cents.
Operating revenues of $13,482 million increased marginally year over year. The top line missed the Zacks Consensus Estimate of $13,518.7 million. Passenger revenues, accounting for 92.1% of the top line, increased to $12,421 million from $12,396 million a year ago. The metric fell short of our estimate of $12,473.5 million.
Cargo revenues decreased 30.9% to $193 million. Other revenues jumped 10.4% to $868 million, also ahead of our expectation of $855.9 million.
More on Q3 Earnings Report
Total revenue per available seat miles (a key measure of unit revenue: TRASM) decreased to 18.4 cents from 19.63 cents a year ago. Passenger revenue per available seat miles (PRASM) decreased 6.3% to 16.95 cents. The actual PRASM figure was less than our expectation of 17.09 cents. Consolidated yield decreased 4.8% to 20.18 cents.
Reflecting the boost in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose to 61,561 million from 58,499 million a year ago. To cater to this increased demand, capacity (measured in average seat miles) expanded to 73,285 million from 68,567 million.
Consolidated load factor (percentage of seats filled by passengers) inched down 1.3 points to 84%. However, the actual figure for load factor was higher than our expectation of 83.4%.
Total operating costs (on a reported basis) increased 9.4% year over year to $13,705 million, with expenses on salaries, wages and benefits rising to $3,974 million from $3,384 million a year ago. Average fuel price per gallon (including related taxes) tumbled to $2.91 from $3.73 a year ago. Consolidated operating costs per available seat mile (excluding fuel and special items) increased 3.3% to 13.02 cents. The actual figure was less than our estimate of 13.16 cents. Fuel gallon consumption increased 6.9% to $1,102 million in third-quarter 2023.
Management expects fourth-quarter 2023 TRASM to be between 5.5% and 7.5%, lower than fourth-quarter 2022 actuals. System capacity for the December-end quarter is estimated to increase 4.5-6.5% from fourth-quarter 2022 levels.
Fuel cost per gallon is projected in the range of $3.01-$3.11 for fourth-quarter 2023. Fuel gallon consumption is forecast to be $1,050 million. The adjusted operating margin in the December-end quarter is anticipated to be 2-4%.
The company envisions total non-operating expenses to be $400 million for the fourth quarter. Cost per available seat miles (adjusted) is estimated to increase 5-7%. AAL projects the December-end quarter's earnings per share (excluding net special items) to be approximately breakeven using a share count of 658.9 million shares. The Zacks Consensus Estimate is pegged at 15 cents.
Management anticipates 2023 capacity to improve 6.5% year over year. TRASM for the full year is expected to be up approximately 1% from 2022 actuals. The adjusted operating margin for 2023 is estimated to be 7% range.
Cost per available seat miles (adjusted) is expected to increase 3% in 2023. AAL expects a provision for income taxes at an effective rate of approximately 25% for the full year, which is expected to be substantially non-cash.
The company now expects 2023 earnings (on an adjusted basis) in the band of $2.25-$2.5 per share (earlier view was in the $3-$3.75 range). The Zacks Consensus Estimate of $2.31 lies below the mid-point of the guided range.
Performances of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
J.B. Hunt Transport Services' (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 17.6% year over year. Results were hurt by falling freight rates. There was a 38% fall in volumes in JBHT's freight brokerage integrated capacity solutions segment and a 20% dip in stops in its final miles services business.
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American Airlines (AAL) Beats on Q3 Earnings, Cuts FY23 View
American Airlines’ (AAL - Free Report) third-quarter 2023 earnings (excluding $1.21 from non-recurring items) of 38 cents per share easily beat the Zacks Consensus Estimate of 26 cents. Results were aided by higher revenues driven by the buoyant air-travel-demand scenario. In the year-ago quarter, AAL reported earnings of 69 cents.
Operating revenues of $13,482 million increased marginally year over year. The top line missed the Zacks Consensus Estimate of $13,518.7 million. Passenger revenues, accounting for 92.1% of the top line, increased to $12,421 million from $12,396 million a year ago. The metric fell short of our estimate of $12,473.5 million.
Cargo revenues decreased 30.9% to $193 million. Other revenues jumped 10.4% to $868 million, also ahead of our expectation of $855.9 million.
More on Q3 Earnings Report
Total revenue per available seat miles (a key measure of unit revenue: TRASM) decreased to 18.4 cents from 19.63 cents a year ago. Passenger revenue per available seat miles (PRASM) decreased 6.3% to 16.95 cents. The actual PRASM figure was less than our expectation of 17.09 cents. Consolidated yield decreased 4.8% to 20.18 cents.
Reflecting the boost in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose to 61,561 million from 58,499 million a year ago. To cater to this increased demand, capacity (measured in average seat miles) expanded to 73,285 million from 68,567 million.
Consolidated load factor (percentage of seats filled by passengers) inched down 1.3 points to 84%. However, the actual figure for load factor was higher than our expectation of 83.4%.
Total operating costs (on a reported basis) increased 9.4% year over year to $13,705 million, with expenses on salaries, wages and benefits rising to $3,974 million from $3,384 million a year ago. Average fuel price per gallon (including related taxes) tumbled to $2.91 from $3.73 a year ago. Consolidated operating costs per available seat mile (excluding fuel and special items) increased 3.3% to 13.02 cents. The actual figure was less than our estimate of 13.16 cents. Fuel gallon consumption increased 6.9% to $1,102 million in third-quarter 2023.
American Airlines, currently carrying a Zacks Rank #3 (Hold), exited the quarter with $13.5 billion of total available liquidity. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Outlook
Management expects fourth-quarter 2023 TRASM to be between 5.5% and 7.5%, lower than fourth-quarter 2022 actuals. System capacity for the December-end quarter is estimated to increase 4.5-6.5% from fourth-quarter 2022 levels.
Fuel cost per gallon is projected in the range of $3.01-$3.11 for fourth-quarter 2023. Fuel gallon consumption is forecast to be $1,050 million. The adjusted operating margin in the December-end quarter is anticipated to be 2-4%.
The company envisions total non-operating expenses to be $400 million for the fourth quarter. Cost per available seat miles (adjusted) is estimated to increase 5-7%. AAL projects the December-end quarter's earnings per share (excluding net special items) to be approximately breakeven using a share count of 658.9 million shares. The Zacks Consensus Estimate is pegged at 15 cents.
Management anticipates 2023 capacity to improve 6.5% year over year. TRASM for the full year is expected to be up approximately 1% from 2022 actuals. The adjusted operating margin for 2023 is estimated to be 7% range.
Cost per available seat miles (adjusted) is expected to increase 3% in 2023. AAL expects a provision for income taxes at an effective rate of approximately 25% for the full year, which is expected to be substantially non-cash.
The company now expects 2023 earnings (on an adjusted basis) in the band of $2.25-$2.5 per share (earlier view was in the $3-$3.75 range). The Zacks Consensus Estimate of $2.31 lies below the mid-point of the guided range.
Performances of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $14,553 million, up 13% year over year.
J.B. Hunt Transport Services' (JBHT - Free Report) third-quarter 2023 earnings per share of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 17.6% year over year. Results were hurt by falling freight rates. There was a 38% fall in volumes in JBHT's freight brokerage integrated capacity solutions segment and a 20% dip in stops in its final miles services business.