American Airlines 3Q profit falls on higher costs, storms
DALLAS (AP) — American Airlines said Thursday that third-quarter profit fell on higher costs and the effect of three hurricanes, but it sees stronger pricing power ahead.
The airline predicted that a key measure of prices would be stronger in the fourth quarter than it was in the third because of improving demand for both business and leisure travel.
The shares rose in trading before the opening bell.
American said it canceled more than 8,000 flights and lost $75 million in pretax earnings because of hurricanes Harvey, Irma and Maria. Chairman and CEO Doug Parker said the airline turned in “solid financial results” in light of the disasters.
American, the world’s biggest airline by passenger traffic, said that it earned $624 million, down 15 percent from $737 million a year earlier.
Excluding special items, the company said it would have earned $1.42 per share, two cents better than the forecast of analysts surveyed by FactSet.
Revenue rose 3 percent to $10.88 billion, just below analysts’ forecast of $10.90 billion.
American said that revenue for each seat flown one mile, a key measure of pricing power, will rise by between 2.5 percent and 4.5 percent in the fourth quarter. It rose 1.1 percent in the third quarter.
Cowen and Co. analyst Helane Becker noted that American executives have repeatedly said the pricing figure would improve from the third quarter into the fourth. The market doubted that forecast, she said, and so Thursday’s reassurance by American will be a plus.
Shares of American Airlines Group Inc. rose $1.28, or 2.5 percent, to $52.30 in trading shortly before Thursday’s opening bell.