What to look for when American Airlines (AAL) reports Q2 2023 earnings

Shares of American Airlines Group Inc. (NASDAQ: AAL) were up 1% on Tuesday. The stock has gained 47% year-to-date and 31% over the past three months. The airline is scheduled to report its second quarter 2023 earnings results on Thursday, July 20, before market open. Here’s a look at what to expect from the earnings report:

Revenue

Analysts are projecting revenue of $13.7 billion for American Airlines in Q2 2023. This would represent a 2% growth from the same period a year ago. In the first quarter of 2023, revenues increased 37% year-over-year to $12.2 billion.

Earnings

American Airlines raised its adjusted EPS guidance for Q2 2023 to $1.45-1.65 from the earlier range of $1.20-1.40. Analysts are predicting EPS of $1.54. In Q1 2023, adjusted EPS was $0.05.

Points to note

American Airlines stands to benefit from a strong demand environment. The company’s efforts in simplifying its fleet and adjusting its network are expected to prove beneficial. Its strategy of forming partnerships that complement its network is paying off.

AAL now expects its unit revenue for Q2 2023 to be down 1-3% versus its previous guidance of down 2-4%. Capacity is expected to be up 3.5-5.5% versus the prior-year period. Average fuel price is expected to range between $2.55-2.65 and CASM-ex is estimated to be up 3.5-5.5%. Adjusted operating margin is projected to be 12.5-14.5% in Q2.

In Q1, unit revenue was up 25% while capacity was up 9% year-over-year. Passenger load factor was 80% while yield was up nearly 21%. CASM-ex was down 1.4%.