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Earnings Outlook: American Airlines’ positive surprise bodes well for Delta and United, says Cowen analyst


With the airlines earnings reporting season about to begin, American Airlines’ better-than expected outlook bodes well for Delta Air Lines and United Airlines, according to Cowen analyst Helane Becker.

Before market open on Tuesday American Airlines Group Inc. 

announced that it expects third-quarter revenue to be up approximately 13% compared with the same period in 2019, before the pandemic hit. The company’s previous guidance was for a rise of 10% to 12%. Analysts surveyed by FactSet have forecast revenue consensus of $13.31 billion, which implies 11.7% growth.

American Airlines also raised its outlook for total revenue per available seat mile (TRASM) to 25%, compared with its previous guidance of up 20% to 24%. American Airlines said that cost per available seat mile (CASM) is expected to be up 14%, above its previously expected range of 12% to 14%.

The carrier said third-quarter capacity was 686 billion available seat miles (ASM), down 9.6% from the same period in 2019, with previous guidance of a decline of 8% to 10%. 

See Now: Airline stocks climb after American Airlines raises revenue outlook

American Airlines, which reports its results before market open on Oct. 20., looks to have successfully navigated a choppy third-quarter operating environment, according to Becker. “Capacity is expected to be at the lower end of the prior range with non-fuel unit costs at the higher end,” she added. “This is an encouraging read-through to the other network carriers and aligns with our view that AAL, DAL, and UAL have the best potential for a positive surprise.”

“We expect that the continued recovery of higher margin business and international travel likely drove the top-line strength,” Becker wrote, in the note.

Delta Air Lines Inc.

reports third-quarter results before market open on Oct. 13. Analysts surveyed by FactSet are looking for third-quarter earnings of $1.53 a share, or $1.54 a share excluding items, on net income of $998 million. Sales are expected to be $12.898 billion, according to analysts.

See Now: Airlines enter earnings season wrestling with fuel prices, hiring challenges

United Airlines Holdings Inc.

reports its third-quarter results after market close on Oct. 18, with a conference call the next day. In July United delivered its first profitable quarter since the start of the pandemic in 2020, despite fuel prices hitting record highs.

Last month United Airlines raised its third-quarter revenue growth outlook, citing “strong” demand at the end of a “robust” summer.

Analysts surveyed by FactSet are looking for earnings of $2.22 a share, or $2.25 a share excluding items, on net income of $745 million. Sales are expected to be $12.729 billion.

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