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・Earlier this month, Melius Research said the current demand backdrop has been ultra-helpful to American Airlines.
・Bank of America, TD Cowen, and Susquehanna said they expect "a constructive setup" in the airline sector for Q2.
・American CEO Robert Isom said his airline is working to reduce the profit margin gap with its top rivals, in a CNBC interview last month.
Shares of American Airlines (AAL) are on investors’ radar as they brace for the company’s second-quarter earnings report, which is expected after the bell on Wednesday.
According to data from Fiscal AI, the consensus revenue estimate stands at $16.69 billion, implying more than 16% year-over-year growth, while earnings per share are expected to be $0.05.
Wall Street is largely bullish on the U.S. airline, with 12 of 25 analysts covering the stock rating it a ‘Buy’ or higher, 11 rating it a ‘Hold’ and two rating it a ‘Sell’ or lower according to Koyfin data. Retail sentiment on Stocktwits, however, has remained ‘Bearish’ over the last 24 hours.
Wall Street’s Take On AAL
Earlier this month, Melius Research said the current demand backdrop has been ultra-helpful to American, especially as its controllable costs are relatively moderate when compared to its top rivals, Delta's (DAL) and United's (UAL), TheFly reported. Cost management is further accompanied by mid-single-digit capacity growth, which looks elevated against a normalized fuel environment, and even more so in the volatile one witnessed this year, the firm reportedly said.
Bank of America, TD Cowen, and Susquehanna said they expect "a constructive setup" in the airline sector for Q2. Goldman Sachs observed that American, similar to Delta, is also benefiting from sustained demand momentum seen during the start of the year. Bernstein said the current demand environment for airlines has held up against a moderate fuel backdrop.
Quick Q1 Recap For AAL
In April, the company reported a 10.8% surge in first-quarter revenue to $13.91 billion, beating estimates of $13.75 billion per Fiscal AI, and earnings were a loss of $0.40 per share, better than the $0.46 per share loss estimate.
The company at the time said it expects to report anywhere between a loss of $0.40 per share and earnings of $1.10 a share for the full year, while for the second quarter, it expects between a loss of $0.20 per share and earnings of $0.20 per share, with revenue growth coming around 13.5% and 16.5% year over year, and capacity growth of as much as 6%.
AAL Working On Closing Profit Margin Gap
In a CNBC interview last month, American CEO Robert Isom said his airline is working to reduce the profit margin gap compared to rivals Delta and United, and that the “long-range plan” the company has in place is helping close it.
The airline’s executives reiterated that American’s plan relies heavily on growing its loyalty program, improving the traveler experience, expanding its network, and increasing higher-end revenue.
AAL shares have fallen about 2% so far this year but have gained roughly 21% over the last 12 months.
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