American Airlines Q2 Results Exceed Expectations, Raises FY23 Outlook

American Airlines Group Inc AAL reported second-quarter FY23 operating revenue growth of 4.7% year-over-year to $14.10 billion, beating the consensus of $13.74 billion. AAL's Q1 adjusted EPS of $1.92 beat the consensus of $1.58.

Passenger revenues rose 6.2 Y/Y to $12.98 billion, cargo revenues declined 39.8% to $197 million, and Other increased 1.1% to $880 million.

Operating expenses for the quarter declined by 4.1% YoY to $11.89 billion.

The airlines reported an operating income of $2.16 billion, compared to $1.02 billion a year ago, and the operating margin was 15.4% on an adjusted basis, up 790 bps.

The passenger load factor was 86.2%, down from 86.9% in 2Q22. Revenue passenger miles increased by 4.4% Y/Y, and ASM increased by 5.3% Y/Y.

The average aircraft fuel price per gallon, including related taxes, was $2.62 vs. $4.03 in 2Q22.

Also Read: American Airlines Pilots Want A Contract Deal At Par With United Airlines: Report

American generated operating cash flow and free cash flow of nearly $1.8 billion and $1.2 billion in the quarter.

American Airlines ended the quarter with ~$14.9 billion of total available liquidity. It reduced total debt by more than $387 million in the quarter.

"Our operation is performing at historically strong levels, and we have worked to refresh our fleet and build a comprehensive global network, all of which helped to produce record revenues in the second quarter. We will build on this momentum the rest of the year and continue to prioritize reliability, profitability, accountability and strengthening our balance sheet," commented American's CEO Robert Isom.

3Q23 Guidance: AAL expects adjusted EPS of $0.85-$0.95 versus consensus of $0.91.

FY23 Guidance: American Airlines raised its adjusted EPS outlook to $3.00-$3.75 from the prior view of $2.50-$3.50 versus consensus of $3.10.

American Airlines exec says they expect to take delivery Of 23 new Mainline Aircraft in 2023, which are all now financed. He added that AAL anticipates 2024 total Capital Expenditure of $3 billion - $3.5 billion.

Price Action: AAL shares traded lower by 1.61% at $18.30 premarket on Thursday.