Shares of American Airlines Group Inc (AAL) and Southwest Airlines Co (LUV) rose on Thursday after the firms raised their fourth-quarter (Q4) guidance. AAL shares rallied nearly 10%, while Southwest stock was up over 3% following the disclosure.
American Airlines said in an SEC filing that it now expects Q4 adjusted earnings per share at $0.55 to $0.75 compared to a previous estimate of approximately $0.25 to $0.50.
The airline noted that the pricing and revenue environment has continued to improve since its prior Q4 guidance issued on Oct. 24, 2024.
AAL now expects Q4 total revenue per available seat mile (TRASM) to be approximately flat to up 1% versus the same period in 2023. This compares with prior guidance of a 1% to 3% decline.
The company expects fourth-quarter CASM-ex to be up approximately 5% to 6%, above the midpoint of its prior guidance range, due partly to a higher accrual for profit sharing driven by higher anticipated quarterly earnings. An earlier guidance predicted an approximately 4% to 6% growth in the metric.
Meanwhile, American Airlines and Citi announced the extension of their more than 37-year co-branded partnership for the next decade, with Citi becoming the exclusive issuer of the AAdvantage co-branded card portfolio in the U.S. in 2026. According to a CNBC report, the airline has dropped its other partner Barclays.
American Airlines expects cash remuneration from its co-branded credit card and other partners to grow by approximately 10% annually.
The company said that for the twelve months ended Sept. 30, 2024, its cash remuneration from its co-branded credit card and other partners was approximately $5.6 billion. “As remuneration from American’s co-branded credit card and other partners approaches $10 billion per year, annual pre-tax income is projected to benefit by approximately $1.5 billion, compared to 2024,” it said.
Following the announcement, retail sentiment for AAL on Stocktwits jumped to a 9-month high to ‘extremely bullish’ (81/100) from ‘bullish’ a day ago. The move was accompanied by extremely high retail chatter.
AAL’s Sentiment Meter and Message Volume as of 10:46 a.m. ET on Dec. 5, 2024 | Source: Stocktwits
At the same time, Southwest expects its operating revenue per available seat mile (RASM) to grow 5.5% to 7% in Q4 compared to a previous guidance of 3.5% to 5.5% growth.
Southwest highlighted that the improvement in expectations relative to the previous fourth quarter 2024 unit revenue guidance range is driven by the combination of better-than-expected leisure travel demand and faster-than-expected benefits from actions taken to mature its revenue management techniques and better optimize the booking curve.
“The company is encouraged by recent revenue trends and forward bookings, including fourth quarter holiday travel, and currently expects strong revenue trends and tactical initiative performance to carry into 2025,” it said in an exchange filing.
However, available seat miles (ASM) is expected to decline approximately 4% during the quarter compared to an earlier guidance of flat growth.
Following the announcement, retail sentiment on Stocktwits jumped to the ‘extremely bullish’ territory (86/100) from ‘bullish’ a day ago, hitting a one-year high.
LUV’s Sentiment Meter and Message Volume as of 10:57 a.m. ET on Dec. 5, 2024 | Image Source: Stocktwits
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