Here’s a look at what to expect when American Airlines (AAL) reports Q4 2023 earnings

Shares of American Airlines Group (NASDAQ: AAL) dropped over 2% on Friday. The stock has gained 22% in the past three months. The airline is scheduled to report its fourth quarter 2023 earnings results on Thursday, January 25, before markets open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $13.02 billion for American Airlines for the fourth quarter of 2023, which would represent a decline of 1.3% from the same quarter a year ago. In the third quarter of 2023, revenues remained flat year-over-year at $13.5 billion.

Earnings

American Airlines expects adjusted EPS to be approx. breakeven in Q4 2023. Analysts are forecasting EPS of $0.10 for the quarter. This compares to adjusted EPS of $1.17 in Q4 2022 and $0.38 in Q3 2023.

Points to note

The resilient demand environment, with steady domestic demand and strong international demand, is likely to benefit American Airlines in Q4. The airline delivered strong performance during the winter holiday travel period which bodes well for the quarter.

However, the company faces a tough comparison with the strong unit revenue environment in the year-ago period. As a result, it has forecast total revenue per available seat mile (TRASM) for the fourth quarter to be down 5.5-7.5% year-over-year. Capacity is expected to be up approx. 4.5-6.5% YoY in Q4.

American expects its cost per available seat mile, excluding fuel, (CASMx) for Q4 to be up around 5-7% YoY. Adjusted non-operating expense is expected to be approx. $400 million while adjusted operating margin is expected to be approx. 2-4% in the quarter.

For the full year of 2023, American expects TRASM to be up approx. 1% and capacity to be up approx. 6.5% YoY. CASMx is expected to be up approx. 3% YoY. Looking ahead into 2024, the company has projected its capacity to be up mid-single-digits YoY.