American Airlines stock surges toward biggest gain in more than a year after carrier raises revenue outlook

The stock has now soared 20.6% since March 7, when it closed at the lowest price since Nov. 20, 2020.

The air carrier said before the opening bell that it now expects first-quarter revenue to be down 17% from the same period in pre-pandemic 2019, an improvement from its previous guidance range of down 20% to 22%. Meanwhile, capacity is now expected to be down 10% to 12% from 2019 versus prior guidance of down 8% to 10%.

“The improvement in revenue is expected to more than offset the increases in fuel and other expenses,” American said in a statement.

The average fuel price per gallon is now expected to be between $2.73 and $2.78 for the quarter, while the estimate for total cost per available seat mile (CASM) excluding fuel is expected to be up 11% to 13%, compared with previous guidance of up 8% to 10%.

American’s stock paced the gains in the U.S. Global Jets ETF
JETS,
+5.01%,
which charged up 4.6%.

Also helping boost the sector was the 7.9% tumble in continuous crude oil futures
CL00,
+0.57%
to $94.90 a barrel, which is 23.3% below the March 8 closing peak of $123.70. See Futures Movers. At the same time, the S&P 500 index
SPX,
+2.24%
rallied 1.3%.

Among the ETF’s more-active components, shares of Delta Air Lines Inc.
DAL,
+5.94%
climbed 7.8%. The air carrier also raised its first-quarter revenue outlook and now expects revenue to be about 78% recovered versus 2019, compared with guidance provided in January of 72% to 76%. The new outlook represents sharp monthly improvement, from 70% recovery in January to 80% recovery in February and to about 83% recovery in March.

Although Delta raised its adjusted fuel price estimate for the quarter to about $2.80 a gallon from $2.35 to $2.50, the carrier said it was “well positioned to recapture higher fuel prices” given its “disciplined approach to capacity, strong brand preference and premium product focus.”

Elsewhere, shares of Southwest Airlines Airlines Co.
LUV,
+2.52%
rallied 4.1%. The company said earlier it expects first-quarter revenue to be down 8% to 10% from the same period in 2019, compared with a previous estimate of down 10% to 15%. The company said it expected fuel costs per gallon of $2.25 to $2.35, with the expected fuel hedging cash settlement gains per gallon raised to 52 cents from 35 cents.

“The improvement in the company’s first quarter 2022 operating revenue guidance is primarily attributable to stronger than anticipated bookings and passenger yields, as well as a strong performance from the company’s loyalty program,” Southwest said in a statement.

JetBlue Airways Corp. shares
JBLU,
+6.58%
hiked up 8.6%, after the carrier cited a “very strong demand environment” for raising its estimate for first-quarter revenue, to be down between 6% and 9% from the same period in 2019 versus prior guidance of down 11% to 16%. But given a “significant rise in fuel costs,” JetBlue lifted its estimated fuel price per gallon to $2.89 from $2.59.

Among other air carriers, shares of United Airlines Holdings Inc.
UAL,
+7.71%
soared 8.0%, Spirit Airlines Inc.
SAVE,
+5.88%
powered up 6.9% and Alaska Air Group Inc.
ALK,
+5.70%
tacked on 3.8%.

Also enjoying a big lift from the upbeat demand outlooks from the airlines were online travel companies. Shares of Expedia Group Inc.
EXPE,
+2.33%
gained 4.3%, Booking Holdings Inc.
BKNG,
+5.88%
added 4.2% and TripAdvisor Inc.
TRIP,
+5.73%
edged up 0.8%.