January 24, 2019 / 12:49 PM / 10 months ago

American Airlines profit and forecast beat on higher fares

(Reuters) - No. 1 U.S. carrier American Airlines (AAL.O) posted on Thursday quarterly profit and 2019 guidance that beat Wall Street estimates thanks to higher fares and healthy passenger demand, sending its shares up nearly 6 percent.

FILE PHOTO - An American Airlines Airbus A321-200 plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake

Smaller rivals Delta Air Lines Inc (DAL.N) and United Airlines (UAL.O) had kicked off fourth-quarter earnings earlier this month with profits that also beat analysts’ expectations.

No. 2 U.S. carrier Delta, however, warned of slower revenue growth in the current quarter due to lost government business and of difficulties in introducing new aircraft because of the U.S. government shutdown that has dragged into its 34th day.

American said revenues per mile flown, a closely watched performance metric which compares sales to flight capacity, would be flat to up 2 percent in the current quarter.

A fall in unit revenue growth to less than 2 percent in the fourth quarter had sent American’s shares spinning lower when it flagged the number earlier this month.

Still, American said it expects its revenue growth to outpace rivals. It forecast $1 billion of additional revenue in 2019 as it continues to optimize its network, expands its Premium Economy product and adds new gates at its Dallas-Fort Worth and Charlotte hubs.

The company also said it sees more than $300 million of cost savings in 2019.

Thursday’s numbers showed fuel expenses rose almost 20 percent in the quarter.

The company forecast full-year earnings per share to rise between 21 percent and 65 percent, well above the 30 percent increase expected by analysts on average, according to IBES data from Refinitiv.

The No. 1 U.S. airline by passenger traffic said net income, excluding special items, rose 8.3 percent to $481 million, or $1.04 per share, in the fourth quarter ended Dec. 31, beating analysts’ estimate of $1.01 per share.

Total operating revenue rose 3.1 percent to $10.94 billion.

Reporting by Ankit Ajmera in Bengaluru and Tracy Rucinski in Chicago; Editing by Maju Samuel and Nick Zieminski

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