American Airlines CEO expects continued demand in the face of recession

American Airlines Group Inc (NASDAQ: AAL) reported better-than-expected results for its fiscal third quarter and issued encouraging guidance on Thursday. Shares still remain little changed.

CEO’s remarks on CNBC

The air carrier had its quarterly revenue topped pre-pandemic by 13% even though capacity was still down 9.6% versus 2019. Speaking with CNBC’s Phil LeBeau, CEO Robert Isom said:

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Demand is coming back strong in all respects. From a leisure perspective, shorthaul, international, but also business. And then there’s blended trips. Demand is out there and we’re doing a good job of servicing it.

He’s also convinced that the demand will remain strong even if the economy slips into a recession.

American Airlines’ future outlook

For the current financial quarter, American Airlines forecasts revenue to be ahead of 2019 levels by as much as 13% on a 5.0% to 7.0% lower capacity.

The air carrier is projecting its per-share earnings to fall between 50 cents and 70 cents in Q4 – significantly better than the 19 cents consensus. The Chief Executive added:

We’re taking a look at paid load factors. In our premium seats, 5.0% to 10% higher than they were pre-pandemic. It shows that customers want to treat themselves, they’re willing to do things, and we’re giving them a product they’re willing to pay for.

American Airlines Q3 financial highlights

• Net income printed at $483 million or 69 cents per share
• A year ago, it had $169 million loss or 25 cents a share
• Adjusted EPS was 69 cents as per the earnings press release
• Revenue jumped 50% year-on-year to $13.462 billion
• Consensus was 54 cents a share on $13.365 billion revenue
• Load factor at 85.3% was also a bit better than expected

Heading into this stock market news, Wall Street had a consensus “hold” rating on American Airlines.