American Airline (AAL) shares soared higher Thursday after the carrier posted a narrower-than-expected first quarter loss and followed its rival United Airlines (UAL) in predicting record near-term revenues and return to profitability.
American said its adjusted loss for the three months ending in March was $2.32 per share, down from a loss of $4.32 per share over the same period last year and around 10 cents inside the Street consensus forecast. Group revenues were pegged at $8.9 billion, more than double the tally recorded over the pandemic-era period last year and marginally ahead of analysts' forecasts.
American said it expects to turn a profit in the current quarter, based on improving demand trends. Revenues for the June quarter should rise between 6% and 8% on a sequential basis, American said, with capacity coming in between 92% and 94% of 2019 levels.
"The demand environment is very strong, and as a result, we expect to be profitable in the second quarter based on our current fuel price assumptions," said CEO Robert Isom. "The work we have accomplished over the past two years — simplifying our fleet, modernizing our facilities, fine-tuning our network, developing new partnerships, rolling out new tools for customers and team members, and hiring thousands of new team members — has us very well-positioned as the industry continues to rebound.”
American shares were marked 6.7% higher in early Thursday trading immediately following at $20.78 each, the highest since November of last year.
Last night, United Airlines also forecast record second quarter revenues, as well as a narrower first quarter loss, amid what CEO Scott Kirby called "the strongest demand environment in my 30 years in the industry."
United's loss for the three months ending in March was pegged at $4.24 per share, down from $7.50 per share loss over the same period last year and just outside the Street's -$4.22 forecast. Revenues also missed estimates at $7.57 billion, but was still more than double last year's pandemic-era tally.
Looking ahead, however, united said its expects to turn profitable by the end of the quarter, with a 10% operating margin, even in the face of surging fuel costs.
United Airlines shares were marked 12.4% higher in early Thursday trading to change hands at $52.30 each.
Last week, Delta posted a narrower-than-expected first quarter loss, with a big boost in revenues, thanks to what it called a "strong rebound in travel demand" as the Omicron infection wave faded over the final month of the period.
Delta CEO Bastian told CNBC at the time that he hoped the White House would lift its pandemic-era mask mandate on planes and in airports, which was slated to last until May 3, but noted that demand would continue to improve even if it were to be extended.
Last month, Airlines for America, a lobby group representing the biggest U.S. domestic and international carriers, asked the Biden Administration to drop predeparture test requirements, following similar decisions in the U.K. and Europe, and said the current mandate requiring masks on planes and in airports was outdated, noting high levels of public immunity to Covid variants, vaccine and therapeutics availability and flight cabin air quality.
