American Airlines lifts guidance ahead of second quarter earnings

American will report its second quarter earnings on July 22 before the market opens

American Airlines has raised its second quarter guidance ahead of its official earnings announcement next week as air travel demand is showing new signs of strength after plunging during the COVID-19 pandemic.

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According to an SEC filing Tuesday, American is forecasting second quarter revenue to be down approximately 37.5% compared to the second quarter of 2019, an improvement from prior guidance of approximately 40%. 

The airline also estimates a "slight" pretax profit, with quarterly net income results expected to be between a loss of $35 million and a profit of $25 million. Excluding the effect of net special items, American forecasts a net loss of up to $1.2 billion and an adjusted per-share loss between $1.67 and $1.76, compared to an adjusted loss of $2.45 per share expected by Wall Street, according to a FactSet survey of 18 analysts.

"We are clearly moving in the right direction," American CEO Doug Parker and President Robert Isom said in a note to employees. "Our revenue and expense performance in the quarter came in better than expectations, and this was achieved while bringing the operation back up to full capacity and safely transporting a record number of travelers."

American flew 44 million passengers in the second quarter, more than five times the number of passengers during the same period in 2020. While still below 2019 levels, the number marks an 82% increase from the previous quarter.

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The company ended the quarter with approximately $21.3 billion in total availability liquidity, a $1.3 billion increase compared to previous previous guidance. American expects an average daily cash build rate of approximately $1 million per day, the first positive quarter since the beginning of the pandemic.

In addition, American expects to report net special credits, including financial assistance from the Treasury's Payroll Support Program extension agreement, of approximately $1.4 billion in the second quarter before the effect of taxes. 

Ticker Security Last Change Change %
AAL AMERICAN AIRLINES GROUP, INC. 21.09 +0.18 +0.89%

American Airlines shares are up 4% during Wednesday's trading session as of the time of publication. The company will report earnings on July 22 before the market opens.