American Airlines Q3 2024 earnings preview: anticipated share price movement

When is American Airlines reporting?

American Airlines is expected to report its third quarter (Q3) earnings before the market opens on Thursday, 24 October 2024.

Key financials

Expectations for Q3

• Revenue: $13.49 billion
• Earnings per share (EPS): $0.11

Comparison to previous quarter

• Revenue: $14.33 billion
• Revenue growth: 2% year over year (YoY)
• EPS: $1.09

Highlights of previous quarter

Last quarter, American Airlines reported its highest-ever quarterly revenue. However, its profit fell 46% to $717 million, or $1.09 per share, as it and other carriers faced an over-supplied domestic market.

During its second quarter (Q2) earnings report, American stated that while it had taken aggressive action to improve revenue performance, “the company’s previous sales and distribution strategy will continue to impact its revenue performance and earnings through the remainder of the year.”

American Airlines Q2 highlights

CEO Robert Isom said, “American has a fleet, network and product built to deliver results, but during the Q2, we did not perform to our initial expectations due to our prior sales and distribution strategy and an imbalance of domestic supply and demand.”

In response to the oversupply, the company expects to grow capacity at 3.5% in the second half (H2) of the year, down from approximately 8% growth in the first half (H1). The company also indicated it would reverse its direct-to-consumer sales strategy following complaints from travel agents and customers.

American Airlines 2024 capacity outlook

What to watch for

• Fuel costs: analysts will closely examine how fluctuations in fuel prices have impacted the airline's operating costs and profitability
• Labour costs: these are typically the second-largest expense for airlines and can significantly affect profit margins
• Customer experience initiatives: investors will be interested in updates on customer experience improvements and loyalty program enhancements aimed at retaining and attracting passengers
• Sales strategy adjustments: after reversing its direct-to-consumer sales strategy, updates on how the revised sales and distribution approach is being implemented and its impact on bookings and customer satisfaction will be important
• Market demand and pricing: comments about market demand and how the airline is managing pricing strategies, especially amid high travel demand and a glut of flights.

American Airlines technical analysis

After a short-lived bounce following its Q2 2024 earnings report in late July, American Airlines' stock price touched a low of $9.07 in early August, just above the $8.25 low struck during the Covid-19 pandemic. Since then, its share price has rallied approximately 33% to trade above $12.00 this week for the first time in four and a half months.

Although the recent rally boosts confidence that the worst may be over for the airline's stock price, surpassing the 200-day moving average of $12.71 is crucial before closing the gap down from $13.42, which occurred following its first quarter (Q1) 2024 earnings disappointment in late May. If successful, we anticipate the share price could rise towards $16.00.

American Airlines daily chart

• _{Source: TradingView. The figures stated are as of 10 October 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}