In the face of a bleak profit forecast and lackluster Q3 revenue, American Airlines (NASDAQ:AAL)' shares rallied from a three-year low on Thursday. This is reminiscent of a similar trend observed in United Airlines after they issued a profit warning due to flight cancellations stemming from the Israel-Hamas conflict.
American Airlines reported a net loss of $545 million, however, it exceeded the FactSet consensus for adjusted earnings per share, recording 38 cents against an anticipated 25 cents. Revenue saw a minor uptick to $13.48 billion, falling short of the projected $13.51 billion. This occurred despite a robust demand environment and record revenue generation from credit card and travel rewards programs.
The airline's load factor dropped to 84% as capacity surged to 73.29 billion available seat miles and traffic saw a rise of 5.2%. Looking ahead, the company anticipates breaking even in Q4 and projects an adjusted EPS of $2.25-$2.50 for 2023. This aligns with the current market consensus but is lower than previous guidance.
Over the past three months, American's stock has seen a decline by 38.9%, while the U.S. Global Jets ETF has dropped by 29.6%, and the S&P 500 has decreased by 5.5%. Despite these recent downturns, Thursday's rally indicates a potential recovery for American Airlines' shares.
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