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American Airlines GroupNASDAQ:AAL) reports Q2 earnings on Thursday before the open on the heels of strong prints from rivals Delta Air Lines (DAL) and United Airlines Holdings (UAL).
The Fort Worth-based carrier is expected to report earnings per share of $1.59. Revenue of $13.73B due to solid international demand, limited capacity and strong demand. The carrier is also benefiting from lower jet fuel prices.
UAL increased its adjusted yearly EPS and third-quarter EPS on Tuesday. Estimated Q2 revenue and earnings were exceeded. Additionally, domestic margins have returned to the levels of 2019 while international margins are well above them. DAL announced last week that it had generated a record operating revenue in the second-quarter of $14.6B, an increase of 19% over a year before. DAL also saw a drop in its average fuel gallon price.
TD Cowen expects AAL’s management team to echo Delta’s (DAL) comments around strong performance for international and premium products.
“We are interested in hearing more about how each airline is thinking about their network strategy in light of recent IROPs at EWR and the wind down of the NEA,” TD Cowen analysts led by Helane Becker wrote in a July 17 note. “Debt paydown will also be a focus.”
Earlier this summer, a federal court ruled that the Northeast Alliance (NEA) partnership between JetBlue Airways Corporation and American Airlines (AAL) constituted anticompetitive behavior and ordered both airlines to terminate the agreement. AAL plans to appeal.
Susquehanna International Group will be monitoring the progress of pilot union negotiations as well as aircraft deliveries, with Boeing (BA), slowing down B787 deliveries, and Airbus (OTCPK EADSF), warning about A320 family delays.
“We view 2024 as a more normalized operating environment for the airlines, though near-term do see growing risk of an economic downturn and delays in aircraft deliveries,” Susquehanna wrote in a July 12 note.