American Airlines Group Inc. (NASDAQ: AAL) reported stronger-than-expected earnings for the fourth quarter as stable passenger traffic and a record load factor lifted revenues.
The airline reported a 19% growth in fourth-quarter adjusted earnings to $1.15 per share from $0.97 per share last year. Earnings also surpassed the market’s projection. Net income advanced to $414 million or $0.95 per share from $325 million or $0.70 per share in the fourth quarter of 2018.
Pre-tax earnings, excluding net special items, were $679 million in the fourth quarter, up 15.1% year-over-year. The bottom line benefited from a 1% decrease in cost per available seat mile.
Record Load Factor
Total operating revenues advanced 3.4% annually to $11.3 billion, which is broadly in line with the estimates. Passenger revenue per available seat mile grew 1% to 14.72 cents, aided by a 2.4% increase in load factor. Meanwhile, cargo revenue dropped 18.3% to $216 million hurt by a decline in volume.
Capital Return
During the fiscal year, the aviation giant returned $1.3 billion to shareholders in the form of dividends and share repurchases. The board of directors declared a dividend of $0.10 per share, to be paid February 19, 2020, to stockholders of record on February 5, 2020.
“During the fourth quarter, we made important progress to address the issues that impacted our business in 2019, and, thanks to our incredible team, we ended the year with our strongest operational quarter on record,” said CEO Doug Parker.
Outlook
Looking ahead, the management expects pre-tax margin, excluding net special items, to be flat year over year in the first quarter of 2020. Adjusted earnings, excluding one-off items, are expected to be between $4.00 per share and $6.00 per share in fiscal 2020.
Shares of American Airlines have fallen 22% since last year. The stock, which has an average price target of $31.89, dropped modestly early Thursday soon after the earnings announcement.