American Airlines stock rallied to clear a buy zone Thursday after updating its Q4 guidance and extending its card partnership with Citi. Southwest Airlines also upped its outlook. Rivals United Airlines and Delta Air Lines also climbed.
American Airlines on Thursday selected Citigroup as its exclusive credit card provider for its AAdvantage plan. The airline expects payments it receives from the co-branded card and other partners to grow 10% annually.
American reported that card partnerships brought in $5.6 billion over the 12 months through September. As those payments approach $10 billion per year, American Airlines expects a $1.5 billion benefit to annual pretax income compared to 2024.
The deal extends the pair's 37-year co-branded partnership for the next decade. As part of the extension, Citi agreed to acquire the Barclays American Airlines co-branded card portfolio and will begin to transition cardmembers to Citi in 2026. The Barclays cardmembers will continue to experience the same benefits they do today, American Airlines said in the news release.
Airlines Hike Outlooks
American Airlines also lifted its Q4 guidance, noting that "the pricing and revenue environment has continued to improve."
American Airlines now expects total revenue per available seat mile to be flat compared to last year or rise up to 1%. The airline previously guided a 1% to 3% decline for TRASM. The cost per available seat mile excluding fuel (CASM-ex) is expected to rise 5% to 6%, slightly higher than its previous forecast for 4% to 6% growth.
American Airlines guided earnings between 55 cents and 75 cents per share adjusted for Q4, well above its prior guidance for 25 cents to 50 cents per share. FactSet expects 41 cents per share.
Southwest Airlines also hiked its Q4 forecast, noting it is "encouraged by recent revenue trends and forward bookings, including fourth-quarter holiday travel." The airline in a filing with the Securities and Exchange Commission said it expects "strong revenue trends and tactical initiative performance to carry into 2025."
Southwest guided a 5.5% to 7% increase in revenue per available seat mile, compared to prior forecasts for 3.5% to 5.5% growth. That corresponds with about a 4% decline in available seat miles, when it previously didn't expect a change.
Southwest also noted it expects Q1 2025 capacity to decrease between 1% and 3% year over year.
American Airlines Stock
American Airlines stock bolted nearly 17% Thursday, exiting the buy zone from a cup-with-handle base. Shares broke out above the 14.66 buy point on Nov. 25. AAL stock is up 26.5% this year.
Southwest stock swung 2% higher, extending further above its handle buy zone. LUV stock cleared a 32.20 buy point in mid-November and is up more than 20% in 2024.
Delta Air Lines stock advanced 2.4% to extend its bounce from its 21-day exponential moving average within a three-weeks-tight pattern. The three-weeks-tight pattern has a 66.25 buy point, according to MarketSurge charts.
DAL stock rallied 63.5% so far this year.
United Airlines climbed 3.2% Thursday, taking a new record high. UAL stock has soared more than 148% in 2024.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison