Why Is American Airlines Stock Rising Thursday?

Shares of American Airlines Group, Inc. (NASDAQ:AAL) are trading higher Thursday in sympathy with Delta Air Lines, Inc. (NASDAQ:DAL) shares after Delta reported better-than-expected results for the third quarter.

What Happened With DAL: Delta reported third-quarter revenue of $16.67 billion, beating estimates of $15.04 billion, according to Benzinga Pro. The airline company posted adjusted earnings per share of $1.71 in the third quarter, beating estimates of $1.52.

Delta’s operating margin grew 11.2% in the quarter, slightly ahead of the 9% to 11% range the company projected in July. Delta also noted that it saw positive momentum throughout the quarter.

“Over the last 6 weeks, sales trends have accelerated across all geographies and in every advance purchase window, positioning Delta to finish the year with momentum,” said Glen Hauenstein, president of Delta.

Delta’s stock climbed as high as $62 after the airline reported earnings, according to Benzinga Pro. The Atlanta-based company said it expects total revenue growth of 2% to 4% in the fourth quarter, primarily boosted by continued growth in the domestic segment and targeted improvement in its Transatlantic unit. Delta also guided for fourth-quarter adjusted earnings per share of $1.60 to $1.90 versus estimates of $1.64.

Why It Matters For AAL: American Airlines, which is the second-largest carrier in the U.S. behind United Airlines, is due to report earnings later this month. American Airlines’s stock is currently riding high because of Delta’s positive results, which signal optimism for the domestic market.

Analysts expect American Airlines to report a loss of 28 cents per share and revenue of $13.64 billion when the company reports earnings on Oct. 23, according to estimates from Benzinga Pro.

American Airlines’s CFO Devon May said in July that more than 70% of its revenue comes from domestic trips, and that the top end of its range for earnings-per-share guidance would be achievable “if the domestic market continues to strengthen.”

AAL Price Action: American Airlines shares were up 0.73% at $11.90 at the time of publication Thursday, according to Benzinga Pro. The stock has traded within a 52-week range of $8.50 to $19.10.

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