Oneworld carrier sees breakeven for the full-year in the face of $6 billion fuel headwind.
American Airlines has become the latest US carrier to report a slump in second-quarter profits as the surge in fuel costs following the Iran conflict continues to hit airline financials
The Oneworld carrier posted an operating profit of $446 million for the April-June period, less than half the $1.13 billion the airline made for the same quarter last year. Similarly, American’s second-quarter net profit shrank to $71 million from $599 million a year ago.
Nonetheless, American points to progress from its commercial strategy which helped to boost revenues 16% to $16.7 billion compared with the same quarter last year.
However, this was dwarfed by a 22% increase in its operating costs $16.3 billion, driven by an 83% jump in fuel costs for the quarter, which added $2.2 billion to its fuel bill.
American chief executive Robert Isom, noting that revenue growth during the second quarter exceeded its initial expectations, says: “Every entity we serve and every cabin we offer, improved meaningfully. This outstanding broad based performance reflects the strength of our commercial strategy.”
Isom says that “executing soundly on that strategy” during the period “helped offset nearly 50%” of the fuel cost increase.
He points to a continued strong demand environment for air travel and says the reduced industry capacity is “constructive” for American.
“Looking ahead, we expect demand to stay strong and our commercial execution to keep improving through the back half of the year.” he says.
“Even against an expected $6 billion in year-over-year in fuel headwind, we anticipate full-year adjusted earnings to be breakeven, at the midpoint of our guidance range.”
The carrier’s updated full-year adjusted earnings per share guidance range is set from a loss of $0.65 to a profit of $0.65. That compares with its previous guidance after the first quarter of an earnings per share loss of $0.40 to profit of $1.10.
The post American points to revenue gains despite fuel hit to second-quarter profits first appeared on FlightGlobal.