American Airlines’ Q4 Results Exceed Expectations

American Airlines Group Inc. (NASDAQ: AAL), one of the leading airline companies in the country, has reported better-than-expected results for the fourth quarter ended December 31, 2021. The robust results were on the back of significant revenue growth.

However, following the earnings, shares of the company declined 3.2% on Thursday. The stock, however, recovered slightly to close at $16.83 in the extended trading session.

Revenue & Earnings

American Airlines has reported total operating revenues of $9.4 billion, which denotes a bumper year-over-year growth of 134.1%. The figure also surpassed the consensus estimate of $9.09 billion. A growth of 162.8% from the prior year witnessed in passenger revenues was the major contributor to the overall growth in total operating revenues. Moreover, this segment made up 89% of the total operating revenues of the company.

The company also reported that its quarterly loss per share declined significantly to $1.42 from $3.86 reported in the previous year. Further, the figure was narrower than the consensus estimate of a loss of $1.79.

Other Operating Metrics

The company has reported total revenue per available seat miles of 15.43 cents, which denotes a year-over-year growth of 27.3%.

Further, its passenger load factor of 80.2% also compares favorably to the previous year’s figure of 64.1%.

Outlook

For the first quarter of 2022, the company expects its capacity to decline by 8% to 10%, compared to the first quarter of 2019. The company expects its revenues to fall between 20% to 22% against the first quarter of 2019.

CEO’s Comments

The CEO of American Airlines, Doug Parker, said, “American’s relative operating performance was particularly strong during the important year-end holiday period. The company’s on-time performance in December was better than any December in years prior to the pandemic, and American performed better than its primary competitors in these operational metrics during the month. These results were achieved despite an increase in sick calls toward the end of the year due to the omicron variant.”

Stock Rating

On January 20, Goldman Sachs analyst Catherine O’Brien reiterated a Sell rating on the stock. The analyst also lowered the price target from $16 to $14, which implies downside potential of 16.5% from current levels.

Consensus among analysts is a Hold based on 1 Buy, 5 Holds and 2 Sells. The average American Airlines stock prediction of $18.94 implies upside potential of 13% from current levels. Shares have gained 5.9% over the past year.

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