Total operating revenue climbed 3% year-over-year to $10.94 billion during the three-month period but missed the Wall Street estimates. Passenger revenue was up 2.8% compared to last year. The strong topline performance more than offset an uptick in operating expenses, led by a 20% rise in fuel costs.
Passenger revenue per available seat mile (PRASM) moved up 1.4% 14.59 cents during the quarter, while total revenue per available seat mile (TRASM) rose 1.7% annually.
Doug Parker, the company’s CEO, said, “We enter 2019 with great momentum. We are intent upon running the most reliable operation in our post-merger history, pursuing high margin growth opportunities at our most profitable hubs, and executing on a number of valuable revenue and cost saving initiatives.”
The strong topline performance more than offset an uptick in operating expenses, led by a 20% rise in fuel costs
Encouraged by the upbeat results, the management predicts a 40% annual growth in adjusted earnings in fiscal 2019 when TRASM is seen outperforming the industry. A comprehensive cost improvement program is being implemented this year, which is expected to create $300 million of annual cost savings by eliminating post-merger cost redundancies.
The company forecasts adjusted earnings between $5.50 per share and $7.50 per share for fiscal 2019. In the first quarter, total revenue available per seat miles (TRASM) is expected to be flat to up 2%, while pre-tax margin excluding net special items is estimated to come in the range of 2.5% to 4.5%.
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In the December quarter, the board of directors declared a cash dividend of $0.10 per share, payable on February 20, 2019, to stockholders of record as of February 6, 2019.
American Airlines’ shares dropped more than 40% in the past twelve months. The stock gained about 6% in early trading Thursday following the earnings report, after closing the last trading session lower.