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Shares of American Airlines Group Inc. bounced sharply off a three-year low into positive territory early Thursday, even after the air carrier reported third-quarter revenue that came up a bit short and provided a downbeat profit outlook.
The stock
AAL,
fell as much as 1.8% toward the lowest price seen since November 2020 moments after results were released, but pulled a sharp U-turn to trade up 1.6% ahead of the open.
The profit warning wasn’t much of a surprise, as it came the day after a rival United Airlines Group Inc.
UAL,
provided a similar warning, citing the impact of flight cancellations as a result of the Israel-Hamas war.
Also read: Airline stocks rocked as Israel-Hamas war fuels profit concerns.
The company swung to a net loss of $545 million, or 83 cents a share, from net income of $483 million, or 69 cents a share, in the same period a year ago.
Excluding nonrecurring items, adjusted earnings per share of 38 cents beat the FactSet consensus of 25 cents.
Revenue grew 0.1% to a record $13.48 billion, amid a “resilient demand environment” and record credit card and travel rewards program revenue, but was below the FactSet consensus of $13.51 billion.
Load factor fell to 84.0% from 85.3%, missing the FactSet consensus of 85.3%, as capacity increased 6.9% to 73.29 billion available seat miles while traffic rose 5.2% to 61.56 billion revenue-passenger miles.
Looking ahead, the company expects to break even on an adjusted basis in the fourth quarter, compared with the FactSet consensus for a profit of 20 cents. For 2023, American said it now expects adjusted EPS of $2.25 to $2.50, which is down from guidance provided in July of $3.00 to $3.75 but in line with the current FactSet consensus of $2.34.
The stock has tumbled 38.9% over the past three months through Wednesday, while the U.S. Global Jets ETF
JETS,
has dropped 29.6% and the S&P 500
SPX,
has shed 5.5%.
