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American Airlines Tops Q3 Earnings on Lower Fuel Costs

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American Airlines Group Inc.AAL reported higher-than-expected earnings in the third quarter of 2015. The company recorded adjusted earnings per share of $2.77, beating the Zacks Consensus Estimate by 5 cents. The earnings beat pleased the investors, resulting in shares of the company gaining value in pre-market trading .

American Airlines Group Inc. - Earnings Surprise | FindTheBest

American Airlines Group reported operating revenues of $10.71 billion in the third quarter, representing a 3.9% decrease over the comparable figure in the year-ago period. Quarterly revenues were marginally short of the Zacks Consensus Estimate of $10.72 billion.

Consolidated passenger revenue per available seat mile (PRASM) declined 6.8% to 13.16 cents in the reported quarter. Consolidated passenger yield declined 9.2% to 15.37 cents. Traffic grew 5.6% on a 2.9% capacity expansion. Consolidated load factor (% of seats filled by passengers) naturally improved as traffic growth outpaced capacity expansion. Load factor climbed to 85.6% from the comparable year-ago figure of 83.4%.

American Airlines' results in the reported quarter benefited from low fuel costs. This is because fuel costs account for a major chunk of an airline's operating expenses. Total operating expenses declined 11.9% to $8.7 billion on the back of a 43.5% reduction in fuel costs.

Backed by a strong quarterly performance, the company looks to return more to shareholders through dividends and share repurchases. During the third quarter, the company bought back 38.4 million shares for $1.56 billion. Moreover, the board of directors authorized an additional $2 billion share buyback program which is expected to be completed by Dec 31, 2016. We are impressed by the company's efforts to reward shareholders consistently through stock repurchases and dividend payments.

Update on Integration Process

American Airlines Group, formed following the Dec 2013 merger between AMR (American Airlines' parent group, founded in 1934) and US Airways, announced that effective Oct 17, there is now a single website and reservations system for all flights operating under the American Airlines brand name).

Upcoming Release

JetBlue Airways JBLU will release its third quarter earnings numbers on Oct 27, 2015.

Zacks Rank

Currently, American Airlines Group has a Zacks Rank #2 (Buy). Investors interested in the airline space may also consider stocks like Ryanair Holdings RYAAY and Virgin America VA , both of which sport a Zacks Rank #1 (Strong Buy).

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AMER AIRLINES (AAL): Free Stock Analysis Report

RYANAIR HLDGS (RYAAY): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

VIRGIN AMERICA (VA): 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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