Key Takeaways:
- American Airlines beat third-quarter earnings estimates by $0.15 per share.
- The airline believes fourth-quarter revenue will be 13% higher than the same quarter of 2019, right before the pandemic began.
- American Airlines agreed to purchase 20 supersonic aircraft, cutting long-haul flight times in half.
WISCONSIN (CoinChapter.com) — Two weeks ago, American Airlines posted earnings of $483 million, or $0.69 a share. One year ago, third-quarter earnings resulted in profits of $169 million, or $0.25 a share – analysts were expecting $0.54.
Notably, American Airlines’ quarterly revenue rose to $13.5 billion, up 13.5% since 2019, despite flying with nearly 10% less capacity. Now that financial markets have fully digested the earnings report, is American Airlines stock (Nasdaq: AAL) a buy?
American Has High Hopes For Holiday Travel
American expects holiday travel to be busy enough that fourth-quarter revenue should be up 13% over 2019, right before the pandemic began. As a result, passenger capacity is estimated to be down 5%-7% from 2019, with projected earnings of $0.50-$0.70 per share.
The airline industry continues to see high passenger counts, especially as we head into the Thanksgiving holiday. Industry-wide, as of the end of summer 2022, there were 583,779 operated flights compared to 564,583 exactly one year prior.
American Airlines’ thorns in the side are fuel and labor costs. Fuel doubled to $3.8 billion from one year ago, and labor costs rose to $3.4 billion, which translates to a 12% rise. In addition, costs per seat mile are rising as the airline expects an 8%-10% increase in that category for the fourth quarter.
All is not perfectly rosy, though, at American Airlines. In August, the carrier cut 31,000, or 16% of their flights, due to industry-wide disruptions. As a result, although demand for air travel has increased, staffing shortages plague the entire industry.
American Airlines (AAL) Stock Price and the Addition of Supersonic Jets
AAL stock is up 18.55% in only four weeks.
Fourth-quarter estimates are calling for $0.57 per share. Because first-quarter 2023 estimates look bleak, potential shareholders may want to wait until March before jumping in. After that, the remainder of next year is looking quite impressive, with a major summer rebound in store.
This past August, American Airlines agreed to purchase 20 supersonic planes from Boom Supersonic. The aircraft fly 1,227 mph, cutting trip time from Miami to London in half. If the officially titled Boom Overture jet deal pays off, American Airlines stock will likely “boom” as well!
