American Airlines shares close higher on Tuesday, company expects to post first quarterly profit since 2019

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.