American Airlines (AAL) earnings Q4 2022

American Airlines‘ fourth-quarter profit beat analysts’ expectations as strong travel demand and high fares buoyed results during a turbulent holiday season.

Here’s how American Airlines performed within the fourth quarter compared with what Wall Street anticipated, based on a mean of analysts’ estimates compiled by Refinitiv:

• Adjusted earnings per share: $1.17 versus an expected $1.14
• Total revenue: $13.19 billion versus expected $13.20 billion

For the three months ended Dec. 31, the corporate reported net income of $803 million, or $1.14 per share, unadjusted — a stark improvement from a lack of $931 million, or $1.44 per share, in the course of the same period a 12 months earlier.

Quarterly revenue of $13.19 billion was up 16.6% from the identical period in 2019, before the Covid pandemic stymied travel. American earlier this month raised its revenue and profit estimates for its fourth quarter.

Shares of American closed 2% higher on Thursday.

American raked in that record fourth-quarter revenue despite operating 6.1% less capability, suggesting flyers keep paying up for seats.

For the complete 12 months, American reported $127 million in net income. It was the primary full-year profit for the carrier since 2019, CEO Robert Isom said in a message to employees Thursday morning.

The corporate paid a mean of $3.50 per gallon of fuel within the fourth quarter, up 48% from last 12 months. It expects that cost to return all the way down to somewhere between $3.33 and $3.38 per gallon because it heads into its first quarter of 2023.

Based on those cost estimates and where demand goes, American said it expects capability to be 8% to 10% higher than the primary quarter of 2022 and projects that it’s going to break even on earnings per share.

Airline executives at Delta and United were similarly upbeat about 2023 bookings despite concerns about layoffs at major U.S. corporations and economic weakness.

American and other airlines have pointed to capability constraints tied to aircraft shortages and the pilot shortfall, particularly for regional airlines, aspects which have kept airfares high.

Isom said in the course of the company’s earnings call that mainline pilot constraints should ease this 12 months but regional pilot shortfalls should last several more years. American said it plans to rent 2,000 pilots for its mainline operation this 12 months.

The Fort Price, Texas-based airline said its unit costs will likely be flat or down as much as 3% in the primary quarter compared with a 12 months earlier, and up as much as 5% for the complete 12 months over 2022.

The complete-year forecast includes recent labor contracts, though the carrier hasn’t yet reached preliminary agreements with pilots and flight attendants.

Of the most important U.S. carriers, only Delta has a preliminary agreement with its aviators.