American Airlines Improved Revenue, But Shares Fell. Here’s Why

Despite best-ever second-quarter flight completions over Memorial Day weekend, American Airlines Group (AAL) shares fell more than 5% after the company raised its guidance for the year by less than investors had expected, based on other airlines’ results.

American Airlines reported record quarterly revenue of $14.1 billion in the second quarter, an increase of 4.7% from the same period a year ago.  The Fort Worth, Texas-based airline said strong demand, especially in June, helped drive the result.

For the three months ending in June, the airline posted an adjusted net income of $1.4 billion, or $1.92 a share, better than the $533 million in income at $0.76 a share it reported in the 2022 second quarter.

American delivered an average load factor of 86.2%, a figure that shows how much capacity at which flights are operating, which was in line with the 2022 second-quarter load factor of 86.9%. The airline saw its fuel costs drop 35% from the year-earlier quarter. 

American increased its operating margins to 15.4% in the second quarter, up from 7.5% over the same period last year. The company said it delivered a record number of flight completions on Memorial Day after operating its busiest-ever schedule for that holiday.

Shares Fall as Results Fail to Meet Competitors 

While American Airlines showed improvement in its year-over-year performance, so have the other airlines. Delta Air Lines (DAL) last week reported an 18.7% jump in operating revenue after it pulled down record international travel sales in June. 

American Airlines adjusted its third-quarter earnings to between $0.85 and $0.95, in line with the estimates from analysts of $0.90. It also raised its full-year guidance to adjusted earnings of $3 to $3.75 a share, better than the high of $3.50 a share it forecasted last quarter, and the $3.04 a share of profits that analysts were anticipating.

However, American’s forecasts were short of what their competitors were promising. A day earlier, United Airlines raised its third-quarter expectations above analysts. And last week, Delta moved its full-year outlook up to $6 to $7 earnings per share, above its previous target of $5 to $6.