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American Forecasts Second-Quarter Profit on Soaring Travel Demand, Airline Stocks Rally

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  • American said March was the first month since the Covid pandemic began that its revenue surpassed 2019 levels.
  • It expects to fly as much as 94% of its 2019 second-quarter schedule, more than competitors Delta Air Lines and United Airlines.
  • The airline said it paid $2.80 a gallon for fuel in the first quarter, up 65% from last year.

American Airlines on Thursday forecast a second-quarter pretax profit as strong bookings help it cover soaring fuel costs, the latest airline to report robust travel demand is outpacing expenses.

American, the country's largest airline, said March was the first month since the Covid pandemic began that its revenue surpassed 2019 levels and said bookings have continued to rise.

The carrier forecast second-quarter sales as much as 8% higher than the same period three years ago even though it plans to fly between 6% and 8% less than its schedule for the same three months of 2019. That's still a more fully recovered schedule than competitors Delta Air Lines and United Airlines, which have been more conservative about restoring capacity throughout the pandemic.

American forecast business travel revenue will be 90% recovered to 2019 levels in the second quarter, led by small and midsize companies.

"I'm a new CEO. People want to come and see me. It's the same thing in the rest of the economy," new CEO Robert Isom told CNBC's "Squawk Box" on Thursday. "People have been cooped up too long, relationships have faded, and they need to be reestablished."

American is the third major airline to report quarterly results so far this month. United said Wednesday it expects to return to a profit this year thanks to a surge in bookings and fares, echoing similar comments a week earlier from Delta.

In March, U.S. domestic airfares rose 20% from 2019 and bookings rose 12%, according to the Adobe Digital Economy Index. Newer data suggests at least a recent slide in demand. In the first 15 days of April, domestic bookings fell 2% as compared with the last 15 days of March though revenue only fell 1%, Adobe Analytics data showed. That was the first two-week period so far this year that bookings dropped compared with the previous 15-day period.

American shares rose nearly 4% Thursday, giving up some of the day's gains after the broader market fell. United jumped more than 9%. Delta rose nearly 3% and Southwest Airlines, which reports next week, were each up more than 2%.

Here's how American performed in the first quarter compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

  • Adjusted loss per share: $2.32 versus an expected $2.40
  • Total revenue: $8.9 billion versus expected $8.826 billion

American posted a net loss of $1.6 billion in the first quarter on revenue of nearly $8.9 billion, more than double its $4 billion in sales a year ago and ahead of analyst estimates. Sales were down 16% compared with the same quarter of 2019.

The Fort Worth, Texas-based airline said it paid $2.80 a gallon for fuel in the first quarter, up 65% from last year. American stopped hedging fuel after oil prices cratered in 2014.

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