American Airlines Q3 profit soars on lower fuel costs

[WASHINGTON] American Airlines Group Inc, the world's largest airline by passenger traffic, said on Thursday that third-quarter net income soared 87 per cent, topping analysts' estimates, buoyed by declining fuel costs.

Shares rose 1.4 per cent to US$37.46 in early trading as the broader market was sharply up.

The airline earned US$1.66 per share, excluding special items, beating analysts' estimates of US$1.63, according to Thomson Reuters I/B/E/S.

Quarterly profit totaled US$942 million in the third quarter. Combined American and US Airways net income was US$505 million a year earlier. American Air and US Airways completed a merger in Dec 2013.

Revenue for the quarter was US$11.1 billion, up 4.4 per cent from a year ago, but slightly below than Wall Street estimates of US$11.15 billion.

Total operating expenses increased 3.5 per cent to US$9.9 billion, as the company benefited from plummeting jet fuel prices. The company does not hedge against the price of jet fuel, unlike some peers, so a drop in fuel costs directly boosts net income.

Fuel costs fell 1.3 per cent at American in the latest quarter versus the costs at the combined companies a year ago.

American Airlines said third-quarter unit revenue, or passenger revenue per available seat mile, was 14.12 cents, up 1 per cent from 2013.

American didn't issue a forecast for the remainder of 2014, but Chief Executive Officer Doug Parker said in a statement that he expects record profits for the final quarter and full year.

In addition to the usual performance measures, investors looked for signs that the spread of the deadly Ebola virus would discourage travel and hurt the airline's current-quarter performance. American recently said it has not seen any impact on its bookings.

The company reported a total of US$281 million in net special charges for the quarter, mostly from continuing merger integration expenses.

REUTERS