American Air sees 2024 profit above analyst expectations

American Airlines Group Inc. expects profit this year to beat Wall Street’s estimates as it benefits from strength in demand for international flights and improved operating performance.

The adjusted profit will be $2.25 to $3.25 a share, American said in a statement Thursday that also included fourth-quarter financial results. Analysts were expecting a profit of $2.22, based on the average of estimates compiled by Bloomberg. 

Shares rose 4.4% to $14.54 at 8:42 a.m. in premarket trading in New York. 

“Overall, the carrier’s results and 2024 guide looked solid, with good cost controls and a little expected help from fuel prices, pushing full-year EPS guidance above expectations,” Stephen Trent, a Citi analyst, said in a note.

American’s outlook reflects continued struggles in the domestic market, where fares are being pushed down by flight capacity exceeding demand, and consumers’ continuing preference for trips outside the US. Passenger revenue from American’s international operations rose 2.5% in the fourth quarter, fueled by travel across the Atlantic, compared with a 2.2% decline in domestic markets.

“We’re going to have a really busy first and second quarters,” Chief Executive Officer Robert Isom said in an interview with CNBC. “It’s going to be a busy year.” 

The carrier set records for the percentage of completed flights in both the fourth quarter and all of 2023, a result of Isom’s focus on making its flight operations more reliable. “Your focused execution as team members is driving our success,” he told American employees in a message.

A decision by US safety regulators to freeze planned production increases at Boeing Co. for 737 Max aircraft shouldn’t affect American, Isom told CNBC. The 20 Max 8 planes American is set to receive this year are already in production, he said.

The Federal Aviation Administration grounded all Max 9s earlier this month after an Alaska Airlines jet’s fuselage panel blew out during flight. American doesn’t fly the Max 9. 

“It has to be quality all the time,” Isom told CNBC. “When it comes to Boeing, they have to get their act together. They have to produce a quality product. It’s just essential.” 

The airline expects a first quarter loss of 15 cents to 35 cents, compared with Wall Street estimates of a 21-cent deficit. 

American had an adjusted fourth-quarter profit of 29 cents a share, compared with Wall Street estimates for 12 cents. Revenue was $13.1 billion, matching analysts’ estimates.