American Airlines Q1 2022 Earnings Report Recap

AAL beat on adjusted losses per share and revenue

Key Takeaways

  • American Airlines' load factor came in well below analyst predictions.
  • Load factor measures the percentage of seating capacity being filled by paying passengers. It fell sharply in FY 2020 amid the COVID-19 pandemic and related travel restrictions.
  • Load factor recovered in FY 2021 but not yet to pre-pandemic levels.
  • The airline expects to be profitable in Q2 2022.
American Airlines Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat -$2.32 -$2.42
Revenue Beat $8.9B $8.8B 
Load Factor Miss 74.4% 79.0%

Source: Predictions based on analysts' consensus from Visible Alpha

American Airlines (AAL) Financial Results: Analysis

American Airlines Group Inc. (AAL) reported Q1 FY 2022 earnings results that beat analysts' expectations. The company's adjusted losses per share were narrower than predicted. Although this was the ninth straight quarter of losses, it was nearly half the adjusted loss per share in the prior-year quarter. American Airlines also beat analyst predictions on revenue, which more than doubled year over year (YOY) thanks to strong gains in passenger revenue. However, the airline's load factor came in below expectations.

The company's shares rose nearly 7% in pre-market trading. Over the past year, American Airlines' shares have provided a total return of -4.4%, below the S&P 500's total return of 7.9%.

AAL Load Factor

American Airlines fell short of consensus estimates for quarterly load factor. The airline saw load factor of 74.4% for the quarter, well below the predicted 79.0%. This marks a significant improvement over 59.5% in the prior-year quarter, but it is still below typical pre-pandemic levels in the mid-80s.

Load factor is a key metric used in the airline industry to indicate the percentage of a carrier's available seats that are filled with paying passengers. Because the costs of sending an aircraft into flight are relatively the same whether there are 50 people aboard or 100, airlines have a strong incentive to fill as many seats as possible by selling more tickets. Higher load factors mean that an airline's fixed costs are spread across a greater number of passengers, making the airline more profitable.

AAL Outlook

American Airlines noted that, excluding net special items, the company was profitable in the month of March. It expects to be profitable in Q2 2022 based on demand trends and fuel price predictions. The company noted that revenue from small- and medium-sized businesses and customers traveling for both leisure and business is nearly at pre-pandemic levels, with corporate bookings the highest since the start of the pandemic as well. The company expects Q2 revenue to be 6% to 8% higher than Q2 2019.

AAL Earnings Call Recap

During a conference call after results were announced, American Airlines executives said that the highest inflation in decades was failing thus far to slow the sharp rebound in air travel. “As an industry, there hasn’t been a great history of how inflation has turned into changes in demand,” said Vasu Raja, American’s chief commercial officer. “We’re so far encouraged by what we see right now in two ways: demand continues to grow, and grow at a meaningful pace."

American Airlines is expected to release Q2 2022 earnings results on July 28, 2022.

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