American Airlines Q4 2021 Earnings Report Recap

AAL beat on earnings and revenue

Key Takeaways

  • American Airlines' load factor beat analysts' estimates.
  • 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.
  • The airline expects Q1 FY 2022 revenue to be about 20% to 22% below revenue it generated in Q1 FY 2019, before the pandemic.
American Airlines Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat -$1.42 -$1.45
Revenue Beat $9.4B $9.3B
Load Factor Beat 80.2% 79.6%

Source: Predictions based on analysts' consensus from Visible Alpha

American Airlines (AAL) Financial Results: Analysis

American Airlines Group Inc. (AAL) reported Q4 FY 2021 earnings that surpassed analysts' expectations. The company reported an adjusted loss per share that was narrower than expected. It marked the eighth straight quarter of losses but was less than half the adjusted loss per share reported in the year-ago quarter as travel demand continues to recover from the COVID-19 shock. American Airlines' also beat analyst forecasts and was up 134.1% from the year-ago quarter's pandemic-depressed levels. However, it is still below the amount of revenue the company was generating before the pandemic. The airline's load factor came in above expectations.

The company's shares rose nearly 2% in pre-market trading. Over the past year, American Airlines' shares have provided a total return of 8.4%, below the S&P 500's total return of 19.3%.

AAL Load Factor

American Airlines reported a load factor of 80.2% in the fourth quarter, a significant improvement from the year-ago quarter's 64.1%, which was adversely affected by the collapse in travel demand triggered by the pandemic shock. 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.

In FY 2019, prior to the pandemic, American Airlines' load factor in each quarter ranged between 82% and 87%. This quarter's load factor is the closest the airline has been to attaining that level again since the start of the pandemic. The company noted in its earnings press release that the past two years have been exceptionally challenging from a planning perspective, as a pickup in travel demand has often been countered by decreases in demand due to new variants of the coronavirus. American Airlines also faced an increase in sick calls from flight crews in December due to the spread of the omicron variant, which forced the company to cancel a number of flights.

The airline said that it expects revenue in Q1 FY 2022 to be down approximately 20% to 22% compared to Q1 FY 2019, before the pandemic and consequent shock to travel demand. American Airlines' next earnings report (for Q1 FY 2022) is anticipated to be released on April 20, 2022.

Article Sources

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  1. American Airlines Group Inc. "4Q21 Financials," Page 1. Accessed Jan. 20, 2022.

  2. American Airlines Group Inc. "4Q21 Financials," Page 2. Accessed Jan. 20, 2022.

  3. Visible Alpha. "Financial Data." Accessed Jan. 20, 2022.

  4. TradingView. "Price Chart: AAL and S&P 500." Accessed Jan. 20, 2022.

  5. CNBC. "Omicron Hits Airline Crews and Sparks Hundreds of Holiday Flight Cancellations." Accessed Jan. 20, 2022.

  6. American Airlines Group Inc. "American Airlines Reports Fourth-Quarter and Full-Year 2021 Financial Results." Accessed Jan. 20, 2022.

  7. Yahoo! Finance. "Earnings Calendar: AAL." Accessed Jan. 19, 2022.

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