American Airlines' Second Quarter Earnings in Brief

DALLAS - A number of difficulties have lately plagued American Airlines (AA), including a pilot shortage that has compelled the company to temporarily ground 100 aircraft at its regional affiliates. However, AA still managed to set a record in the second quarter with revenue of US$13.4bn.

This summer has been one of the busiest seasons for the largest airline in the world, according to CEO Robert Isom during the airline's second-quarter results call on Thursday. Business traveler income, which has completely rebounded to pre-pandemic levels, was the driving force behind AA's record-breaking quarter.

The American carrier has also noticed that leisure demand has surpassed 2019 numbers.

Despite experiencing significant weather-related delays and cancellations throughout June, AA recorded a US$476m net profit for the second quarter. Isom acknowledged that flying has been made more difficult by air traffic control problems in some busy markets.

Still, in terms of total departures, AA's schedule in Q2 was more than 25% greater than that of its nearest rival. With an average load factor of 87%, which is 10 points higher than the second quarter of 2021, AA and its regional partners operated more than 500,000 flights in the quarter, an 8% increase over that period in 2021.

Almost Hitting the Wall Street Mark

The Fort Worth, Texas-based airline said it had a profit of 68 cents per share. Earnings, adjusted for non-recurring costs, were 76 cents per share. After deducting non-recurring expenses, earnings came to 76 cents per share.

The outcomes fell short of Wall Street's expectations. Zacks Investment Research surveyed 10 analysts, and the average forecast they provided was 79 cents per share in earnings.

American thus ended the second quarter with US$15.6bn of total available liquidity. The company is on track to execute on its plan to pay down approximately US$15bn of total debt by the end of 2025. The airline expects Q3 revenue to be 10% to 12% higher than in 2019 based on 8% to 10% lower capacity but still profitable.

Since the year's start, shares of AA have dropped by 15%. In the past year, the stock has decreased by 26%. AA said it would continue to match its forward capacity with the resources required to support its operations. However, there were reports this week by NBC that AA was cutting 90,000 flights between August and December, most of them in October, to maintain optimal operational efficiency.

Airways is looking into these Q3-Q422 flight cut allegations, so stay tuned for a deep dive on those numbers.

Feature image: American Eagle (Republic Airways) N447YX Embraer E175. Photo: Arturo La Roche/Airways