American Airlines' Revenue Tracking Well As Demand Picks Up, Says Analyst

  • Raymond James analyst Savanthi Syth has reiterated a Market Perform rating on the shares of American Airlines Group Inc AAL.
  • The analyst has moved her EPS estimates higher due to correcting for a calculation error related to the convertible debt dilution.
  • Her 4Q22E/2023E/2024E EPS are revised from $0.48/$0.50/$2.10 to $0.54/$0.58/$2.34.
  • Syth added the revised estimates continued to reflect demand weakness in 1H23 not apparent in current trends, and anticipated new labor contracts starting 2023.
  • Raw jet fuel has averaged about $3.40 QTD, only slightly ahead of the analyst’s $3.38 forecast for 4Q22.
  • She believes revenue for the U.S. airline group is currently tracking at or somewhat above the higher end of guidance ranges due to demand in off-peak periods holding up better than expected and pliable weather during Thanksgiving holiday travel.
  • Syth continues to expect greater revenue momentum at Delta Air Lines Inc DAL and United Airlines Holdings Inc UAL due to relative exposure to large-corporate and international demand recovery.
  • She also looks forward to see American closing its margin gap relative to peers as a result of the simplified fleet, up-gauging of existing aircraft, and network changes.
  • Price Action: AAL shares are trading higher by 1.01% at $13.97 on the last check Tuesday.
  • Photo Via Wikimedia Commons
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