American Airlines’ second-quarter earnings were good, but they weren’t good enough in the eyes of investors.
It beat earnings expectations, posted record revenue, and followed Delta Air Lines (ticker: DAL) and
(UAL) in the all-year hiking guide.
But that hat-trick failed to lift shares of American (AAL), which had fallen 2.9% before opening. By contrast, shares of United Airlines, which reported record earnings late Wednesday, were up 2%.
The fortunes of the two stocks are likely to be linked. Strong income from Delta last week and United last night put more pressure and expectations on Americans’ earnings. A rebound in airline shares, inspired by strong international travel demand and lower fuel costs, also raised the bar.
US stocks are up 35% since May 24, the Wednesday before Memorial Day weekend, which started strong summerN. after United record income At $5.03 a share, more than $1 more than expected, Americans need to be great.
They are just very good.
reported adjusted earnings of $1.92 per share on revenue of $14.1 billion for the three months ended June 30. The carrier raised its full-year earnings guidance from $3 to $3.75 a share, up from $2.50 to $3.50 previously.
Analysts had expected second-quarter earnings per share (EPS) of $1.59 on revenue of $13.7 billion. The American’s own guide is for earnings between $1.20 and $1.40 a share.
In the third quarter, Americans saw EPS between $0.85 and $0.95, a notable deceleration from the second quarter. That’s in line with the expectation of $0.91—but the matching estimate isn’t enough.
On the issue of pilot pay, American management has said it intends to pay wages commensurate with what United offers. reached an interim agreement with its pilots union on Saturday about a deal to raise wages by up to 40% over four years.
The Americans’ own tentative agreement was reached in May, and pilots will begin voting on it later this month. But now it looks like the deal will be tweaked.
“The strong revenue performance was driven by continued broad-based demand strength and U.S. fulfillment factor performance for the quarter,” the company said in a statement. It added that demand was particularly strong in June, fueled by an increase in pre-bookings or short-lived tickets.
The outlook remains good for the three largest US carriers. The Americans’ results did not quite live up to lofty expectations.
Write to Callum Keown at [email protected]