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American Airlines’ (AAL - Free Report) third-quarter 2024 earnings (excluding 53 cents from non-recurring items) of 30 cents per share beat the Zacks Consensus Estimate of 13 cents. In the year-ago quarter, AAL reported earnings of 38 cents per share. The year-over-year bottom-line contraction was mainly due to high labor costs. Operating revenues of $13.65 billion surpassed the Zacks Consensus Estimate of $13.49 billion and increased 1.2% year over year.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The airline lifted its earnings per share forecast for 2024 citing improved pricing power as the airline industry cut down excess capacity in the domestic market. AAL’s management now expects current-year adjusted earnings per share in the $1.35-$1.60 range (earlier expectation was in the range of 70 cents-$1.30). The Zacks Consensus Estimate for current-year earnings is pegged at $1.22 per share at present.
American Airlines Group Inc. Price, Consensus and EPS Surprise
Passenger revenues, accounting for 91.7% of the top line, inched up to $12.5 billion from $12.4 billion recorded a year ago. The metric was ahead of our estimate of $12.37 billion. Cargo revenues increased 5% to $202 million. The metric surpassed our estimate of $175.5 million. Other revenues jumped 6% to $922 million, which missed our expectation of $935.8 million.
Total revenue per available seat miles (a key measure of unit revenues: TRASM) decreased to 18.04 cents from 18.4 cents recorded a year ago. Passenger revenue per available seat miles (PRASM) decreased 2.3% to 16.55 cents. The actual PRASM figure was higher than our expectation of 16.3 cents. Consolidated yield decreased 5.2% to 19.12 cents, short of our estimate of 19.27 cents.
Reflecting the increase in air travel demand, consolidated traffic (measured in revenue passenger miles) rose 6.4% year over year. To cater to this increased demand, capacity (measured in average seat miles) expanded 3.2%. Consolidated load factor (percentage of seats filled by passengers) increased 2.6 points to 86.6%. The actual figure for the load factor was higher than our expectation of 84.6%.
Total operating costs (on a reported basis) decreased 1.1% year over year to $13.56 billion, with expenses on salaries, wages and benefits growing 3.1% to $4.09 billion. The labor deal, inked with its pilots last year, contributed to the increase. Expenses on aircraft fuel and taxes decreased 10.4% to $2.87 billion. Average fuel price per gallon (including related taxes) increased to $2.50 from $2.91 a year ago.
Consolidated operating costs per available seat mile (excluding fuel and special items) increased 2.8% to 13.39 cents. The actual figure was more than our estimate of 13.24 cents. Fuel gallon consumption increased 4.1% to $1.15 billion in the third quarter of 2024.
American Airlines, currently carrying a Zacks Rank #2 (Buy), reduced total debt by nearly $360 million in the September quarter. AAL is on track to reduce total debt from peak levels by $15 billion by 2025-end.
Management expects TRASM to be between 1% and 3%, lower than fourth-quarter 2023 actuals. System capacity is estimated to increase 1-3% from fourth-quarter 2023 levels. Cost per available seat miles (adjusted) is expected to increase 4-6% from fourth-quarter 2023 actuals.
Fuel cost per gallon is projected in the range of $2.2-$2.4. Fuel gallon consumption is expected to be between $1.075 billion and $1.095 billion. Adjusted operating margin is anticipated in the 4.5-6.5% range. The company envisions total non-operating expenses to be $350 million.
AAL projects the December quarter's earnings per share (excluding net special items) to be in the range of 25-50 cents using a share count of 721.1 million. The Zacks Consensus Estimate is currently pegged at 26 cents.
Remaining Aspects of 2024 Outlook
TRASM is expected to be down in the 3-4% band from 2023 actuals. Management anticipates capacity to improve in the 5-6% range from the year-ago levels. Cost per available seat miles (adjusted) is expected to increase 2-3% from the prior-year levels.
Fuel cost per gallon is projected in the range of $2.55-$2.65. Fuel gallon consumption is expected to be between $4.40 billion and $4.42 billion. Adjusted operating margin is anticipated in the 4.5-5.5% range. The company envisions total non-operating expenses to be $1.44 billion. The effective tax rate is expected to be 26%. AAL expects free cash flow in the $1-$1.5 billion range.
Performance of Some Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2024 earnings (excluding 47 cents from non-recurring items) of $1.50 per share, which fell short of the Zacks Consensus Estimate of $1.56. Earnings decreased 26.11% on a year-over-year basis due to high labor costs.
Revenues of $15.68 billion surpassed the Zacks Consensus Estimate of $15.37 billion and increased 1.2% on a year-over-year basis, driven by strong air travel demand. Adjusted operating revenues (excluding third-party refinery sales) totaled $14.59 billion, flat year over year. This was inclusive of the $380 million impact from the outage caused by CrowdStrike (CRWD - Free Report) .
J.B. Hunt Transport Services’ (JBHT - Free Report) third-quarter 2024 earnings of $1.49 per share outpaced the Zacks Consensus Estimate of $1.42 but declined 17.2% year over year.
Total operating revenues of $3.07 billion surpassed the Zacks Consensus Estimate of $3.04 billion but fell 3% year over year. Operating income for the September quarter decreased 7% year over year to $224.1 million.
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AAL Beats Q3 Earnings & Revenue Estimates, Lifts FY24 EPS View
American Airlines’ (AAL - Free Report) third-quarter 2024 earnings (excluding 53 cents from non-recurring items) of 30 cents per share beat the Zacks Consensus Estimate of 13 cents. In the year-ago quarter, AAL reported earnings of 38 cents per share. The year-over-year bottom-line contraction was mainly due to high labor costs. Operating revenues of $13.65 billion surpassed the Zacks Consensus Estimate of $13.49 billion and increased 1.2% year over year.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The airline lifted its earnings per share forecast for 2024 citing improved pricing power as the airline industry cut down excess capacity in the domestic market. AAL’s management now expects current-year adjusted earnings per share in the $1.35-$1.60 range (earlier expectation was in the range of 70 cents-$1.30). The Zacks Consensus Estimate for current-year earnings is pegged at $1.22 per share at present.
American Airlines Group Inc. Price, Consensus and EPS Surprise
American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote
More on Q3 Earnings of AAL
Passenger revenues, accounting for 91.7% of the top line, inched up to $12.5 billion from $12.4 billion recorded a year ago. The metric was ahead of our estimate of $12.37 billion. Cargo revenues increased 5% to $202 million. The metric surpassed our estimate of $175.5 million. Other revenues jumped 6% to $922 million, which missed our expectation of $935.8 million.
Total revenue per available seat miles (a key measure of unit revenues: TRASM) decreased to 18.04 cents from 18.4 cents recorded a year ago. Passenger revenue per available seat miles (PRASM) decreased 2.3% to 16.55 cents. The actual PRASM figure was higher than our expectation of 16.3 cents. Consolidated yield decreased 5.2% to 19.12 cents, short of our estimate of 19.27 cents.
Reflecting the increase in air travel demand, consolidated traffic (measured in revenue passenger miles) rose 6.4% year over year. To cater to this increased demand, capacity (measured in average seat miles) expanded 3.2%. Consolidated load factor (percentage of seats filled by passengers) increased 2.6 points to 86.6%. The actual figure for the load factor was higher than our expectation of 84.6%.
Total operating costs (on a reported basis) decreased 1.1% year over year to $13.56 billion, with expenses on salaries, wages and benefits growing 3.1% to $4.09 billion. The labor deal, inked with its pilots last year, contributed to the increase. Expenses on aircraft fuel and taxes decreased 10.4% to $2.87 billion. Average fuel price per gallon (including related taxes) increased to $2.50 from $2.91 a year ago.
Consolidated operating costs per available seat mile (excluding fuel and special items) increased 2.8% to 13.39 cents. The actual figure was more than our estimate of 13.24 cents. Fuel gallon consumption increased 4.1% to $1.15 billion in the third quarter of 2024.
American Airlines, currently carrying a Zacks Rank #2 (Buy), reduced total debt by nearly $360 million in the September quarter. AAL is on track to reduce total debt from peak levels by $15 billion by 2025-end.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AAL’s Fourth-Quarter Outlook
Management expects TRASM to be between 1% and 3%, lower than fourth-quarter 2023 actuals. System capacity is estimated to increase 1-3% from fourth-quarter 2023 levels. Cost per available seat miles (adjusted) is expected to increase 4-6% from fourth-quarter 2023 actuals.
Fuel cost per gallon is projected in the range of $2.2-$2.4. Fuel gallon consumption is expected to be between $1.075 billion and $1.095 billion. Adjusted operating margin is anticipated in the 4.5-6.5% range. The company envisions total non-operating expenses to be $350 million.
AAL projects the December quarter's earnings per share (excluding net special items) to be in the range of 25-50 cents using a share count of 721.1 million. The Zacks Consensus Estimate is currently pegged at 26 cents.
Remaining Aspects of 2024 Outlook
TRASM is expected to be down in the 3-4% band from 2023 actuals. Management anticipates capacity to improve in the 5-6% range from the year-ago levels. Cost per available seat miles (adjusted) is expected to increase 2-3% from the prior-year levels.
Fuel cost per gallon is projected in the range of $2.55-$2.65. Fuel gallon consumption is expected to be between $4.40 billion and $4.42 billion. Adjusted operating margin is anticipated in the 4.5-5.5% range. The company envisions total non-operating expenses to be $1.44 billion. The effective tax rate is expected to be 26%. AAL expects free cash flow in the $1-$1.5 billion range.
Performance of Some Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2024 earnings (excluding 47 cents from non-recurring items) of $1.50 per share, which fell short of the Zacks Consensus Estimate of $1.56. Earnings decreased 26.11% on a year-over-year basis due to high labor costs.
Revenues of $15.68 billion surpassed the Zacks Consensus Estimate of $15.37 billion and increased 1.2% on a year-over-year basis, driven by strong air travel demand. Adjusted operating revenues (excluding third-party refinery sales) totaled $14.59 billion, flat year over year. This was inclusive of the $380 million impact from the outage caused by CrowdStrike (CRWD - Free Report) .
J.B. Hunt Transport Services’ (JBHT - Free Report) third-quarter 2024 earnings of $1.49 per share outpaced the Zacks Consensus Estimate of $1.42 but declined 17.2% year over year.
Total operating revenues of $3.07 billion surpassed the Zacks Consensus Estimate of $3.04 billion but fell 3% year over year. Operating income for the September quarter decreased 7% year over year to $224.1 million.