American Airlines' profit tops estimates as fare pressures ease
- by Dan Gutierrez
- in Markets
- — Oct 21, 2016
The world's largest airline said on Thursday its net income fell to $737 million, or $1.40 per share, in the third quarter ended September 30 from $1.69 billion, or $2.49 per share, a year earlier.
The results surpassed Wall Street expectations.
American Airlines Group Inc.'s profit and revenue fell amid continued overcapacity, which has plagued other USA airlines, as it continued to spend to integrate US Airways Group into the company. Total revenue from each seat flown a mile, a key financial measure for airlines, declined only 2.2 percent in the quarter, the shallowest decline of the year.
In this Monday, Aug. 1, 2016, photo, passengers walk to their gates through the terminal as American Airlines planes wait to depart at O'Hare International Airport in Chicago.
The decline in that figure, called unit revenue, was the smallest recorded at American since the first quarter of previous year. Excluding special items, the company's profit was US$1.76 per share, compared with the average analyst estimate of US$1.69, according to Thomson Reuters I/B/E/S. American plans to grow just 1 percent next year, less than half its expansion pace in the first nine months of this year.
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"We are investing in our people and our product and are well along the path to restoring American as the greatest airline in the world", said chairman and CEO Doug Parker. The airline and its regional subsidiaries spent 11 percent less on fuel than they did in the third quarter of 2015.
The company recognized $294 million in net special pretax charges in the quarter, mainly integration costs.
American, the top USA airline by traffic, and other carriers are struggling with weak unit revenues, caused by too many flights and seats being offered than demand warrants. Four analysts surveyed by Zacks expected $10.55 billion.
Shares of American dipped 4 cents to close at $40.59.
