American Airlines expects Q4 revenue to fall lesser than expected

Written by on January 11, 2022

January 11, 2022

(Reuters) – American Airlines Group Inc on Tuesday forecast a smaller-than-expected fall in fourth-quarter revenue, sending shares of the No. 1 U.S. carrier up about 2% before the bell.

The company said it expects revenue for the quarter to be down about 17%, compared with its prior expectation of an about 20% fall.

Rapidly rising COVID-19 infections of the Omicron variant have forced airlines to cancel flights as pilots and cabin crew fell sick and needed to quarantine.

Mass cancellations over the Christmas and New Year holiday period and higher incentives given to employees had an impact on carriers, with American Airlines forecasting higher fourth-quarter costs.

The company expects cost per available seat mile—the standard measure in the industry showing what it costs to fly one seat one mile—to be up between 13% and 14%, compared with its previous guidance of a rise of between 8% and 10%.

A writedown of excess spare parts inventory also increased costs, the airline added.

The company expects to report pretax margin to be down between approximately 12% and 13% versus its previous forecast of a fall in the range of 16% to 18%.

The company is set to report results on Jan. 20.

(Reporting by Kannaki Deka in Bengaluru; Editing by Amy Caren Daniel)

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