American Airlines raised its fourth quarter guidance on December 5, 2024. The company raised its adjusted earnings per diluted share guidance to around $0.55 and $0.75, up from previous estimate of $0.25 to $0.50 earnings per share (EPS).
The company said the increase was driven by pricing and revenue environment continuing to improve since its previous fourth quarter guidance in October. In addition, the updated guidance reflects the “presently anticipated impact of the new agreement” with Citibank, related to American's co-branded credit card programme.
Under the new agreement, American will partner with Citi as the exclusive issuer of the AAdvantage co-branded credit card portfolio in the US in 2026. The 10-year agreement is expected to expand loyalty and rewards offering for its members and Citi-branded cardmembers in the future, as well as driving incremental value for both companies.
Citi reached an agreement to acquire the Barclays American Airlines Co-branded Card portfolio and will begin transitioning cardmembers to the Citi portfolio in 2026. Barclays cardmembers will still have access to the benefits offered at present.
American expects cash remuneration from its co-branded credit card and partners to grow by approximately 10% annually. For the 12 months ended September 30, 2024, American's cash remuneration from its co-branded credit card and other partners was approximately $5.6bn.
“As remuneration from American’s co-branded credit card and other partners approaches $10 billion per year, annual pre-tax income is projected to benefit by approximately $1.5 billion, compared to 2024,” read the company in its update.
Furthermore, the updated guidance detailed cost per available seat mile (CASM) excluding fuel is expected to increase by 5-6% on fourth quarter 2023. Previous guidance had estimated an increase of 4-6%. In addition, total revenue per available seat mile (TRASM) is expected to be flat to 1% increase on the same period last year - down from previous guidance of a 1-3% increase.