Packed planes and strong profits in the fourth quarter
U.S. airlines have experienced a surge in traveler demand since the end of the pandemic, and American Airlines Group (AAL) is no exception. In the last three months of 2023, American Airlines reported earnings of $0.29 per share, surpassing analysts’ expectations of $0.10 per share. The company also recorded a revenue of $13.06 billion, slightly exceeding the estimated $13.02 billion.
For the entire year, American Airlines generated a record-breaking revenue of nearly $53 billion, contributing to full-year free cash flow of $1.8 billion. Additionally, the company successfully reduced its debt by $3.2 billion in 2023, making significant progress towards its 2025 debt reduction goal of more than 75%.
American Airlines CEO, Robert Isom, expressed his satisfaction with the company’s exceptional performance in 2023. He attributed their success to the strength of their network and travel rewards program, a young and streamlined fleet, reliable operations, and an outstanding team.
Looking forward, American Airlines projects a loss ranging from $0.15 to $0.35 per share for the current quarter, which is historically the slowest period for the industry. However, they anticipate an overall profit of $2.25 to $3.25 per share for the full year, exceeding the consensus estimate of $2.25 per share.
Is American a buy after a strong earnings report?
Investors should note that the airline industry is highly cyclical, and a potential economic slowdown could impact future demand. Despite this, American Airlines remains optimistic about the future.
If American Airlines can maintain its strong execution demonstrated in the fourth quarter, there is potential for the stock to gain momentum moving forward. Investors should carefully assess the cyclical nature of the industry and consider the company’s optimistic outlook before making any investment decisions.