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American Airlines profit beats estimates as costs fall

Posted by: Admin | Posted on: July 22nd, 2016 | 0 Comments

American Airlines Group Inc (AAL.O) reported a better-than-expected quarterly profit as the world’s largest airline benefited from cheaper fuel.

American’s total operating costs fell 3.3 percent to $8.61 billion in the second quarter, with fuel costs declining 20 percent.

Net income plunged 44 percent to $950 million as provisions for income tax surged to $543 million from $15 million.

Excluding items, American’s profit slumped to $1.77 per share from $2.62, but handily beat the average analyst estimate of $1.68, according to Thomson Reuters I/B/E/S.

Total operating revenue declined 4.3 percent to $10.36 billion in the quarter ended June 30.

Airline stocks have fallen in recent months amid growing investor concern that carriers will continue to add flights and push down prices despite insufficient demand, and that rebounding oil prices will add to their fuel costs.

Economic slowdown abroad pose an even greater risk to revenue, with foreigners reluctant to buy tickets on U.S. airlines to visit the United States as the dollar rises in value against other currencies.

American’s shares were down slightly at $34.85 in light premarket trading on Friday.

Up to Thursday’s close, the stock had fallen more than 17 percent this year.

(Reporting by Sweta Singh in Bengaluru and Jeffrey Dastin in New York; Editing by Kirti Pandey)

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