American Airlines Warns Fuel Spike Could Add $1 Billion to Fourth-Quarter Costs

EarningsCommodityAnalyst Impact 4
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Summary · why it matters

American Airlines Group expects third-quarter revenue growth of 16% to 19% year over year, CEO Robert Isom said at a Morgan Stanley conference, citing broad-based strength in corporate, international, domestic, premium-cabin and coach demand. The carrier's outlook is clouded by fuel, as Chief Financial Officer Devon May said fourth-quarter fuel prices have risen about $1 per gallon over the past four weeks versus levels baked into prior guidance, and that each one-cent move is worth roughly $10 million per quarter, implying about a $1 billion increase in fourth-quarter fuel expense. May said American may adjust late-fourth-quarter capacity, including December flying, in response to higher fuel prices. Isom said the company has recovered a substantial portion of higher fuel costs through pricing and that premium seating is expected to increase about 50% by the end of the decade, with 30% of seats now generating 50% of revenue. American expects approximately $8 billion in co-brand cash remuneration this year, projected to exceed $10 billion by 2030, and said its Citi relationship could add $1.5 billion in pretax profitability by 2030, while total debt has fallen from a peak of $54 billion to roughly $36 billion against a $35 billion target.

Impact on stocks 4

Industrials▲ · 1 stocks
American Airlines Group
AAL
▲ PositiveDemandSupplyrelevance

Q3 revenue growth of 16-19% on broad-based corporate, international, domestic, premium and coach demand.

Digital Finance & Tokenization▲ · 1 stocks
Citigroup Inc.
C
± MixedCapitalrelevance

American's Citi co-brand relationship could add $1.5B in pretax profitability by 2030, a benefit to Citi's card partnership.

Financials▲ · 1 stocks
Space Economy▲ · 1 stocks

Theme Impact 1

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