American Airlines nasdaq Aal Stock Edges Higher on Upbeat Q2 Profit Forecasts

American Airlines (NASDAQ: AAL) Stock Edges Higher on Upbeat Q2 Profit Forecasts

American Airlines Group (NASDAQ: AAL) stock saw a modest rise in intraday trading Thursday after the company provided a rosy Q2 profit outlook.

American Airlines (AAL) announced on Thursday its financial results for the first quarter, along with an adjusted EPS guidance for the second quarter that beat estimates.

Financial Highlights

  • Total revenue for the first quarter rose by 3.1% to $12.57 billion, although it narrowly missed estimates of $12.60 billion.
  • Adjusted operating margin in the first quarter was reported at 0.6%, down from 3.7% a year ago.
  • American Airlines posted an adjusted EPS loss of $(0.34), slightly below the consensus estimate of $(0.29).
  • The company generated an operating cash flow of $2.2 billion and a free cash flow of $1.4 billion during the quarter.

Debt Reduction

American Airlines made significant progress in debt reduction, slashing total debt by nearly $950 million in the first quarter. This achievement represents over 80% of its target to reduce debt by $15 billion by the end of 2025.

American Airlines (NASDAQ: AAL): Guidance for Q2 and Beyond

American Airlines expects adjusted EPS for the second quarter of 2024 to range between $1.15 and $1.45, outperforming the consensus estimate of $1.18. The company also reaffirmed its full-year 2024 adjusted EPS outlook of $2.25 to $3.25, standing firm against the consensus of $2.35. 

The carrier projects a 7%-9% increase in capacity for the second quarter of 2024, with full-year capacity expected to rise by mid-single digits year-over-year (Y/Y). In contrast, the company forecasts a drop in second-quarter total revenue per available seat mile (TRASM) by roughly 1%-3% year over year.

Meanwhile, the company expects its second-quarter cost per available seat mile (CASM-ex), excluding fuel, to rise by approximately 1% to 3% Y/Y. For the full year, the airline expects CASM-ex to increase by approximately 0.5% to 3.5% Y/Y.

Robert Isom, CEO, stated,

“While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets. Our team is running a fantastic operation, driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet.”

In March, American Airlines bolstered its future fleet by placing orders for 260 new aircraft, featuring models such as the Airbus A321neo, Boeing 737 MAX 10, and the Embraer E175.

American Airlines (NASDAQ: AAL) Stock Price Action

At the time of this report, AAL stock stands at $14.13, indicating a 1.51% increase from the previous trading session. This week, it has surged in value by 0.78%. Trading activity has seen 58,253,813 (58.25 million) shares change hands, significantly higher than the average daily volume of 31.79 million.