American Airlines improves outlook following busy holiday season

DALLAS (AP) — American Airlines raised its forecast of fourth-quarter revenue and profit Thursday, boosted by higher fares and full planes capped off with a busy holiday travel period.

American earned $1.12-$1.17 per share during the fourth quarter, almost double its forecast. The revenue rose 16% to 17% over the same quarter of 2019, prior to the pandemic.

The shares of Fort Worth’s Texas-based company surged 5% within minutes of trading beginning, despite the market losing its opening day.

All U.S. airlines were affected by a severe winter storm before Christmas. American and most other airlines were able to recover quickly, while Southwest was not. Southwest cancelled over 16,000 flights in the 10 days prior to Christmas, representing 37.5%. More than 1,000,000 passengers were left scrambling for flights on other airlines.

“There was certainly some benefit from re-accommodating probably a relatively small amount of Southwest passengers … but overall the (new, higher forecast) was just broad-based strength across the quarter,” Chief Financial Officer Devon May said in an interview.

According to FlightAware figures in December, officials said that any gain from Southwest’s meltdown was likely offset with American cancelling over 800 flights or 2.6% of its schedule.

Due to the effects of the worst pandemic, airlines have seen a strong demand for travel. However, there are fewer flights and seats. This has led to higher fares.

American claimed that the revenue from each seat per kilometer increased by 24% in the fourth-quarter of 2021, which is a much greater increase than what it previously expected.

American will announce its financial results Jan. 26. Delta Air Lines will be leading the charge when it releases fourth-quarter numbers Friday.