American Airlines Group has reported third-quarter 2022 net income of $483 million, or $0.69 per diluted share, compared to $169million in the prior-year period. American posted record quarterly revenue of $13.5 billion, which represents a 13% increase over the same period in 2019, despite flying 9.6% less capacity. The company produced an operating margin excluding net special items of 7.2% in the quarter.
American ended the third quarter with $14.3 billion of total available liquidity (comprising of cash and short-term investments plus undrawn capacity under revolving and other credit facilities) which more than double the total available liquidity at year-end 2019. The airline company stated that it continues to execute on its plan to pay down approximately $15bn of total debt by the end of 2025. In the third quarter, the company made approximately $380 million in scheduled debt and finance lease payments. As of Sept. 30, 2022, American had reduced its total debt by $5.6 billion from peak levels in the second quarter of 2021.
“The American Airlines team continues to deliver on our goals of running a reliable operation and returning to profitability,” said American’s CEO Robert Isom. “Demand remains strong and it’s clear that customers in the U.S. and other parts of the world continue to value air travel and the ability to reconnect post-pandemic. American has the youngest, most fuel-efficient fleet among U.S. network carriers and we are well-positioned for the future because of the incredible efforts of our team.”
American and its regional partners operated more than 500,000 flights in the quarter, with an average load factor of 85.3%, which is 6.6 points higher than the third quarter of 2021.
The airline noted that demand for domestic and short-haul international travel remains “very strong” and that it expects further improvement in demand for long-haul international travel as travel restrictions and testing requirements are lifted.
Costs are continuing to rise, however. American’s fuel bill was more than $3.8bn, with labour costs up 12% over last year figures to $3.4 billion.
The airline said its costs per available seat mile will likely rise 8% to 10% over the same quarter of 2019 and, for the full year, as much as 13% over three years ago.
Looking ahead, American states that it will continue to match its forward capacity with the resources required to support its operation. Based on current trends, the company expects its fourth-quarter total revenue to be 11% to 13% higher versus the fourth quarter of 2019 on 5% to 7% lower capacity. With these demand trends and the current fuel price forecast and excluding the impact of special items, the company expects to produce an operating margin of between 5.5% and 7.5% in the fourth quarter. Based on today’s guidance, American expects its fourth-quarter 2022 earnings per diluted share excluding net special items to be between $0.50 and $0.70.