American Airlines Posts Profit of $1.7 Billion on Fuel Costs

Parker said Thursday’s announcement of plans for the new headquarters should underscore American’s confidence. If any of our competitors are suggesting weve lost sight of this, they are incorrect. (NASDAQ:AAL) might also take into consideration the long term analyst estimates on the stock.

The airline reported total operating revenues of $10.71 billion in-line with the consensus estimates at the Street.

That’s the power oil prices have on the passenger aviation industry. AMR Eagle Holding Corporation (AMR Eagle), a wholly owned subsidiary of the Company, owns two regional airlines, which do business as American Eagle-American Eagle Airlines, Inc. and Executive Airlines, Inc.

“We will do more to disaggregate and really do more to have a product that has less frills”, he said.

American, based in Fort Worth, Texas, earned $1.7 billion in the third quarter, up from $942 million a year earlier.

The results were buoyed by savings on jet kerosene, which cushioned the blow from the fare wars with domestic discounters and sagging demand in Latin America, Americans top overseas market.

“Given that 50% of our revenue is up for grabs in these markets, and these carriers have had so much success when they weren’t matched, we know that we have to match their fares”, American Airlines President Scott Kirby said. This last quarter is the highest profit for the airline in history. Nine equities research analysts have rated the stock with a hold rating and eight have issued a buy rating to the company’s stock. The company’s fuel costs fell to $1.6bn for the quarter – a 44 per cent decline from 2014. Now the stock is down 1.28% and is trading at $45.38 as at 9:42 EDT. The measure fell 6.8 percent third quarter. Non-fuel unit costs rose by a relatively manageable 2.6% from the prior-year quarter.

Airfares were down across American’s route network last quarter. Three analysts surveyed by Zacks expected $10.72 billion.

American said passenger revenue, as a percentage of capacity, will fall between 5 and 7 percent in the current quarter from a year ago.

Kirby believes that those 87% of passengers who only fly American once a year-the infrequent flyers, if you will-view flight tickets as a commodity and simply want the lowest fare.

The airline’s move to sell cheap fares with more restrictions highlights how competition is intensifying between the largest US airlines and low-priced rivals, such as Spirit Airlines Inc and Southwest Airlines Co. ARC also reported a few steep price cuts in particular city pairs, including Chicago O’Hare-New York city airports (down 24 percent year-over-year in September), O’Hare-Los Angeles worldwide (down 20 percent), Atlanta-Orlando (down 20 percent), New York City-Miami (down 13 percent) and O’Hare-San Francisco (down 10 percent).

The Company continues to make significant investments in the airline through its extensive fleet renewal program, giving it the youngest fleet of the USA network airlines.