American Airlines' Revenue Tracking Well As Demand Picks Up, Says Analyst

Raymond James analyst Savanthi Syth has reiterated a Market Perform rating on the shares of American Airlines Group Inc AAL.
The analyst has moved her EPS estimates higher due to correcting for a calculation error related to the convertible debt dilution.
Her 4Q22E/2023E/2024E EPS are revised from $0.48/$0.50/$2.10 to $0.54/$0.58/$2.34.
Syth added the revised estimates continued to reflect demand weakness in 1H23 not apparent in current trends, and anticipated new labor contracts starting 2023.
Raw jet fuel has averaged about $3.40 QTD, only slightly ahead of the analyst’s $3.38 forecast for 4Q22.
She believes revenue for the U.S. airline group is currently tracking at or somewhat above the higher end of guidance ranges due to demand in off-peak periods holding up better than expected and pliable weather during Thanksgiving holiday travel.
Syth continues to expect greater revenue momentum at Delta Air Lines Inc DAL and United Airlines Holdings Inc UAL due to relative exposure to large-corporate and international demand recovery.
She also looks forward to see American closing its margin gap relative to peers as a result of the simplified fleet, up-gauging of existing aircraft, and network changes.
Price Action: AAL shares are trading higher by 1.01% at $13.97 on the last check Tuesday.
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