American Airlines shares rose on better carrier expectations for the second quarter

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An American Airlines flight takes off from Miami, Florida.

Marco Bello | Reuters

Shares of American Airlines rose after the carrier expected better revenue and a lower-than-expected loss in the second quarter, in the latest indication that airlines are recovering from the toll of the coronavirus pandemic on travel.

The Texas-based carrier said in Fort Worth on Tuesday that it expects to post a “slight” pre-tax profit for the second quarter. It said it would likely report results ranging from a net loss of $35 million to a net profit of $25 million for the three months ended June 30. Excluding net special items, you expect a net loss of $1.2 billion and an adjustment per share loss of between $1.67 and $1.76. That compares with analysts’ estimates of $2.44 per share.

“It is clear that we are moving in the right direction,” CEO Doug Parker and President Robert Isom said in a task force note.

American’s stock rose nearly 2% in after-hours trading on Tuesday.

Air travel has rebounded sharply since spring, when Covid-19 vaccines were widely rolled out across the United States and officials lifted restrictions that shuttered attractions from indoor restaurants to theme parks.

American said it carried 44 million passengers in the second quarter, up 82% from the first three months of 2021, though still below 2019 levels.

Revenue for the quarter ending last month is likely 37.5% lower than the same period in 2019, when it generated $11.96 billion, compared to an earlier estimate of a 40% decline.

American said it expects daily cash building to be around $1 million a day, the first positive quarter since the pandemic began.

US airlines have at times struggled to meet the rapidly rising demand for travel.

Since March 2020, $54 billion in federal payroll aid has been earmarked for airlines in exchange for no layoffs, and Americans and its competitors have encouraged thousands of employees to take early retirement or leave leave last year. This has contributed to the staff shortage that has emerged in certain work groups such as customer service agents and pilots.

For its part, American cut its schedule for the first half of July by 1% and canceled flights last month in part due to a lack of trained and available pilots or other staff.

“Restoring this service quickly in response to unprecedented demand growth is incredibly complex,” Esom and Parker wrote. “But the American people are rising to the occasion, and the results prove it.”

The company is scheduled to announce its quarterly results on July 22, before the market opens.

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