American Airlines Group Inc (AAL) said on Tuesday it expected to post its first pre-tax quarterly profit since the beginning of the COVID-19 pandemic, since robust air travel demand helps it offset rising costs.
The company expects a 22.5% growth in its total revenue per available seat mile amid a lower-than-planned capacity.
American Airlines sees a 12% revenue growth to $13.39 billion in the second quarter compared to the same three-month period of 2019. Previously, the company had forecast second-quarter revenue growth of 11% to 13%.
The airline expects a pre-tax income of $585 million in the latest quarter.
Meanwhile, fuel expenses are expected to average between $4.00 and $4.05 per gallon, compared with a prior forecast of $3.92 to $3.97 per gallon.
American Airlines shares closed higher for the fifth time in the past ten trading sessions on NASDAQ on Tuesday. It has also been the sharpest single-session gain since April 13th. The stock went up 9.98% ($1.34) to $14.77, after touching an intraday high at $15.03. The latter has been a price level not seen since June 10th ($15.83).
The shares of American Airlines Group have retreated 17.76% so far in 2022 compared with a 19.88% loss for the benchmark index, S&P 500 (SPX).
In 2021, American Airlines’ stock went up 13.89%, thus, it underperformed the S&P 500, which registered a 26.89% gain.
Analyst stock price forecast and recommendation
According to TipRanks, at least 7 out of 12 surveyed investment analysts had rated American Airlines’ stock as “Hold”, while 4 – as “Sell”. The median price target on the stock stands at $17.98.