American reports record profits in the second quarter
American Airlines Group (AAL) posted a record profit in the second quarter, reaping $1.7 billion counting special charges, 97% more than it earned during that period last year.
Not counting special charges the airline, which merged with US Airways to form the biggest carrier in the world, posted a profit of $1.9 billion, or $2.62 per share.
"It's a record not just for the second quarter at American, but also the highest earnings American has ever had in one quarter,'' Doug Parker, the airline's CEO, said in an earnings call with investors Friday. "We're quite proud of that, given that this company was in bankruptcy 18 months ago.''
Passenger revenue dipped 6.9% in the April-to-June quarter, compared with that period last year. Parker said that the decline is the result of seats and flights exceeding passenger demand. But with fuel prices remaining relatively low, earnings remain strong.
Parker pointed to the company's purchase of $753 million worth of its own shares in the second quarter as an indication of the airline's confidence.
"We're really bullish on the future,'' Parker said.
The stock repurchase, coupled with $70 million in dividends, added up to $823 million being given back to investors in the quarter.
But investors appeared to be a little less buoyed by the airline's quarterly report. Shares were down 1.18% to $42.11 in morning trading.
S&P Capital IQ analyst Jim Corridore lowed his earnings-per-share estimate for the year to $8.90 from $10.12, but raised his opinion for American from "buy" to a "strong buy." He wrote in an investors note that “based on our estimates, AAL is trading at a 30% discount to the peer group average, which we think is unwarranted given what we see as AAL’s relatively smooth merger integration and its full participation in lower oil prices due to strategy to not hedge oil.’’