American Airlines Q2 2022 Earnings Report Recap

^{Note: EPS excludes special items. Source: Predictions based on analysts' consensus from Visible Alpha}

American Airlines (AAL) Financial Results: Analysis

American Airlines Group Inc. (AAL) reported Q2 FY 2022 earnings results that were mixed relative to analysts' expectations. The company's adjusted earnings per share (EPS) were slightly lower than predicted. However, this quarter was the first in which American Airlines posted a quarterly profit since the start of the pandemic. American Airlines beat analyst predictions on revenue, which increased by 12.2% compared to the same quarter in FY 2019 despite flying with less capacity. The growth was fueled by substantial gains in passenger revenue. This also helped the airline's load factor to come in above expectations.

AAL Load Factor

American Airlines surpassed estimates for quarterly load factor. The airline saw load factor of 86.9% for the quarter, above the predicted 85.0%. Load factor gains were driven by a significant recovery in air travel demand. With this quarter, American Airlines has returned to a typical pre-pandemic range for this metric.

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 and Stock Performance

American Airlines said in its earnings release that it flew a schedule over 25% larger in terms of total departures than its closest competitor. Despite industry-wide challenges to operations in June, the company said its on-time departure and arrival rates and completion factor for Q2 FY 2022 were each an improvement relative to the same quarter in FY 2019.

American Airlines said it expects Q3 total revenue to be 10% to 12% higher as compared with Q3 FY 2019, despite 8% to 10% lower capacity. It expects to be profitable again in Q3 FY 2022.

Shares of American Airlines stock fell by about 1.7% in pre-market trading within the first half hour after the company's earnings release. The airline's stock has underperformed the broader market in the past year, providing a 1-year trailing total return of -26.2% compared with -8.4% for the S&P 500 as of July 21.

American Airlines is expected to release Q3 FY 2022 earnings results on Oct. 20, 2022.