Transportation

What Is Driving American Airlines Earnings Even Higher

Chris Lange

Published: January 27, 2017 10:05 am

Last Updated: January 12, 2020 3:27 pm

American Airlines Group Inc. (NASDAQ: AAL) released its fourth-quarter earnings report before the markets opened on Friday. The airline giant said that it had $1.48 in earnings per share (EPS) and $9.79 billion in revenue. The consensus estimates from Thomson Reuters had called for $0.92 in EPS and revenue of $9.74 billion. In the same period of last year, it reported EPS of $2.00 and $9.63 billion in revenue.

Total revenue per available seat mile (TRASM) was 14.90 cents, up 1.3% from the fourth quarter of last year, marking the first year-over-year increase since the fourth quarter 2014. This quarter the mainline cost per available seat mile (CASM) was 12.93 cents, up 5.7%.

As part of American Airlines’ ongoing fleet renewal program, the company invested roughly $4.4 billion in new aircraft in 2016, including 55 new mainline and 42 new regional aircraft. Additionally, it invested about $1.3 billion on the integration of the airline, product enhancements and operational improvements.

During the quarter, the company returned $606 million to its stockholders through share repurchases and dividends. American Airlines also announced a new $2.0 billion share repurchase authorization.

Doug Parker, board chair and chief executive of American Airlines, commented:

The American Airlines team continued to produce outstanding results in 2016, and outsiders are taking notice. Air Transport World named American as its 2017 Airline of the Year, citing our team’s integration work, operational and customer service improvements, and the significant investments we are making in our product. This recognition is entirely due to the great work of our 120,000 team members.

He added:

As we enter 2017, we will continue to make upgrades to American through new product initiatives. These include Basic Economy which will further our goal to offer the right fares and features for every customer, and, on international flights, our Premium Economy product. And no matter which product our customers choose, they’ll be transported on the youngest fleet among our large U.S. competitors.

Shares of American Airlines traded down 2.6% to $48.29 Friday morning, with a consensus analyst price target of $54.00 and a 52-week trading range of $24.85 to $50.64.