American Airlines Tops Wall Street's 4Q Forecasts
FORT WORTH (AP) — American Airlines reported Thursday that fourth-quarter profit slipped 11 percent as higher costs for fuel and labor offset rising revenue.
The world's biggest airline also gave a strong forecast for 2018 earnings as demand for travel remains strong.
American said that it earned $258 million in the fourth quarter, down from $289 million a year earlier.
Excluding one-time gains and costs, American said it earned 95 cents per share. That beat the average Wall Street expectation of 92 cents per share, based on a Zacks Investment Research survey.
Fort Worth-based American said revenue rose 8.3 percent to $10.60 billion. That also beat analysts' expectations of $10.58 billion.
American said it expects 2018 earnings between $5.50 and $6.50 per share, well above the $5.32 per share forecast of FactSet.
On a call with analysts, Chairman and CEO Doug Parker said that forecast did not change after United Airlines announced major growth plans for 2018 through 2020. Many investors worry that growth will cause a glut of seats that will drive down prices and profits, and it led to a major sell-off of airlines stocks including American on Wednesday.
On the cost side, American reported that fourth-quarter spending on fuel jumped more than 23 percent, and labor expenses rose 7 percent. That caused operating expenses to grow faster than revenue.
In trading before Thursday's opening bell, shares of American Airlines Group Inc. were down 29 cents to $54.50. They have climbed slightly more than 5 percent since the beginning of the year. The stock has risen 15 percent in the last 12 months.
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