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American Airlines (AAL) Q4 Earnings In Line, Revenues Top (Revised)

American Airlines Group Inc .'s AAL fourth quarter 2016 earnings (adjusted) of 92 cents per share were in line with the Zacks Consensus Estimate. Quarterly earnings decreased significantly year over year. Higher costs hurt the bottom line.

Revenues of $9,789 million were 1.7% above the year-ago figure and edged past the Zacks Consensus Estimate of $9,765.5 million. Total revenue per available seat miles (TRASM) improved 1.3% to 14.9 cents in the reported quarter. This was the first quarter in which the metric grew on a year-over-year basis since the fourth quarter of 2014.

Consolidated yield improved 1.8% to 15.62 cents. Passenger revenue per available seat miles improved 0.2% to 12.71 cents. Traffic was down 1.3%, whereas capacity was up 0.4%. This resulted in relatively empty planes. Consolidated load factor (percentage of seats filled by passengers) declined as traffic contracted and capacity expanded. Load factor deteriorated to 81.4% from the comparable year-ago figure of 82.7%.

Total operating expenses climbed 5.4% year over year to $9 billion primarily due to an increase in labor costs. Expenses pertaining to salaries and benefits surged 17.4%. Consolidated operating costs per available seat miles (CASM: excluding special items) increased 7.6%.

American Airlines Group, Inc. Price, Consensus and EPS Surprise

American Airlines Group, Inc. Price, Consensus and EPS Surprise | American Airlines Group, Inc. Quote

During the quarter, this Zacks Rank #2 (Buy) company returned $606 million to its shareholders through the payment of $52 million in dividends and buyback of shares worth $554 million. Furthermore, the carrier also declared a dividend of 10 cents per share. The dividend will be paid on Feb 27, 2017, to the shareholders as of Feb 13.

The carrier also approved a new $2 billion buyback program, which is scheduled to expire on Dec 31, 2018. The carrier has returned more than $9.6 billion to stockholders through share repurchases and dividends since mid-2014. We are impressed by the company's shareholder-friendly initiatives.

American Airlines remains focused on introducing new aircraft and retiring old ones from its fleet. In keeping with its aim to modernize its fleet, the carrier took delivery of 55 new mainline aircraft and 42 regional ones, during 2016. Also, the carrier invested $4.4 billion toward a new aircraft during the year.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Outlook

The company expects TRASM for the first quarter of 2017 to be up in the band of 2.5-4.5% (year over year). American Airlines expects pre-tax margin excluding special items in the first quarter to be approximately in the range of 3-5%. Consolidated CASM (excluding fuel and special items) is projected to increase 9% in the first quarter. The metric is expected to increase around 4% in 2017. Capacity (system) in 2017 is projected to increase 1% in 2017.

Other Important Releases Coming Up

Investors in the airline space keenly await the fourth-quarter earnings reports of SkyWest, Inc. SKYW , Spirit Airlines SAVE and Alaska Air Group ALK , slated for release on Feb 2, Feb 7 and Feb 8, respectively.

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(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)

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American Airlines Group, Inc. (AAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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