American Airlines shares increased on the carrier's better second-quarter forecast

July 15, 2021: -American Airlines shares increased after the carrier forecast better revenue and a narrower loss than the estimated for the second quarter, the recent sign that airlines are recovering from the Covid-19 pandemic’s toll on travel.

On Tuesday, the Fort Worth, Texas-based carrier said that it expects to post a “slight” pretax profit for the second quarter. It said it would likely report results that range from a net loss of $35 million to a net profit of $25 million for the three months that completed on June 30. It excludes net special items, expecting a net loss of nearly $1.2 billion and an adjusted per-share loss of amid $1.67 and $1.76. That compares with analysts’ estimates of $2.44 a share.

“We are moving in the right direction,” CEO Doug Parker and President Robert Isom said in a staff note.

On Wednesday, American stock was up more than 3% in premarket trading.

Air travel had bounced back sharply since the spring when Covid-19 vaccines rolled out around the U.S. and officials that lift restrictions that shuttered attractions from indoor dining to theme parks.

American says that it flew 44 million passengers in the second quarter, an 82% rise from the first three months of 2021, though still below 2019 levels.

Revenue for the quarter ended last month likely came in 37.5% below the same period of 2019, when it generated $11.96 billion, compared with an earlier estimate of a 40% drop.

American said it expects its daily cash build rate will be about $1 million a day, the first positive quarter since the pandemic started.

U.S. airlines have struggled at times to meet the rapid rise in travel demand.

Since March 2020, airlines have been set aside $54 billion in federal payroll aid in exchange for not laying off workers; American and its competitors encouraged thousands of employees to take early retirement or leaves of absence last year. That has contributed to staffing shortages that have cropped up in specific workgroups like customer service agents and pilots.

American, for its part, trimmed its schedule for the first half of July by 1% and canceled flights last month partially due to a shortage of trained and available pilots or other staff.

“Restoring service this quickly in response to unprecedented demand growth is incredibly complex,” Isom and Parker wrote. “But the people of American are rising to the occasion, and the results prove that.”

The carrier is scheduled to report quarterly results on July 22 before the market opens.