American Airlines has updated its third-quarter 2019 guidance including its margins for the 737 MAX, which is slightly higher due to lower fuel costs.
The company reiterated the midpoint of unit revenue despite minor headwinds and as expected, the MAX is out of the schedule until at least 15 January.
Helane Becker of analysts Cowen and Co believes that this will put modest incremental pressure on fourth quarter 2019 non-fuel unit costs but will allow for level setting of 4Q19 estimates ahead of earnings.
"American's 3Q19 guidance update was in line with our expectations," Becker wrote in the update. "With third-quarter unit revenue as expected despite minor headwinds, while lower fuel costs drove a modestly higher pre-tax margin in the quarter."
American also updated the market on the 737 MAX. The company took the aircraft out of its schedule through January 15, 2020, given ongoing work from Boeing and the FAA towards a fix. The airline had a previously expected return date of early November.
Management anticipates the software update coming later this year which will allow for recertification of the MAX and re-entry by January 2020.
Previously, American has said that the removal of the aircraft means it would have to cancel around 115 flights each day, and has said that it cost the company upwards of $185 million during its second quarter of 2019.
American updated its third-quarter investor guidance and stated that revenue was in line with Cowen and Co's expectations despite one-off headwinds, while fuel came in slightly lower than expected pushing up margins slightly from the prior forecast. American now forecasts its third-quarter unit revenue to increase 1.5% to 2.5%, compared to prior guidance of up 1% to 3% despite the impact of Hurricane Dorian.