American Airlines bumps up revenue forecast on robust travel demand
American Airlines Group Inc (AAL.O) has become the latest U.S. carrier to lift its forecast for quarterly revenue, another sign that pandemic-weary travelers were shrugging off rising airfares to plan more leisure trips.
The Fort-Worth, Texas-based airline said on Friday it expected revenue for the three months ending June to rise between 11% and 13% over pre-pandemic levels, compared with its prior view of a 6% to 8% increase, Reuters reported.
The outlook upgrade aligns American Airlines with rivals such as Delta Air Lines Inc (DAL.N) and Southwest Airlines Co (LUV.N), which have enjoyed a resurgence in bookings in recent months after two years of pandemic-restricted travel.
While decades-high inflation and signs of a slowdown in the economy have raised concerns about the outlook for the airline industry, the strong revenue expectations suggest that rising price pressures have not yet deterred flyers.
The sector has, however, been grappling with a jump in fuel costs – its second-biggest expense after labor – as a supply deficit and the Russia-Ukraine war drive up crude prices.
American Airlines said it expected fuel expenses to average between $3.92 and $3.97 per gallon in the second quarter, up from its previous forecast of $3.59 to $3.64 per gallon.
The higher revenue, however, should more than offset the increased costs, it said.
Struggling with a staff shortage, the carrier also said it expected capacity in the second quarter to be at the low end of its prior guidance range.