American Airlines expects fourth-quarter profit thanks to strong travel demand

American Airlines reported a third-quarter profit of $483 million and joined rivals in forecasting robust travel demand as airlines continue to shrug off concerns about an economic slowdown.

American’s revenue rose to a record $13.46 billion in the three months ended Sept. 30, up 13 percent from 2019, despite flying nearly 10 percent fewer, a sign that passengers are still flying despite the – the high prices. Its quarterly sales were slightly ahead of analysts’ estimates.

“Demand remains strong and it’s clear that customers continue to value air travel and the ability to reconnect after the pandemic,” Chief Executive Robert Isom said in a note to employees Thursday after the company reported the results.

American said it expects the power to last through the holiday season. For the fourth quarter, it expects total revenue to grow as much as 13% compared to three years ago, before the Covid pandemic. It forecast its capacity in the quarter to decline 5% to 7% from 2019 and forecast adjusted earnings per share between 50 cents and 70 cents.

Shares rose more than 2% in premarket trading after the report.

Here’s how American performed in the third quarter compared to Wall Street’s expectations, according to Refinitiv’s consensus estimates:

• Adjusted earnings per share: 69 cents vs. 56 cents expected.
• Total income: $13.46 billion versus $13.42 billion expected.

American raised its third-quarter earnings forecast last week, sending stocks higher.

Rivals United Airlines and Delta Air Lines also predicts they will be profitable by the end of the year thanks to strong bookings and pricing.

The industry is seeing strong demand for travel, well into the off-peak autumn season, as consumers continue to fly and in many cases pay more than in 2019. All three major airlines are touting higher unit revenue than three years ago , before the pandemic, a trend that helps them more than offset rising costs.

Americans’ fuel bills nearly doubled from a year earlier to more than $3.8 billion, while labor costs rose 12 percent to $3.4 billion.

The Fort Worth, Texas-based airline said its cost per available seat mile is likely to rise 8% to 10% in the same quarter of 2019, and for the full year by as much as 13% compared to three years ago.

U.S. executives will hold a call with analysts to discuss the results at 8:30 a.m., when they are likely to face questions about 2023 booking forecasts, business travel demand and labor talks.