American Airlines (American) has produced record quarterly revenues of US$14.1 billion in the second quarter. The strong revenue performance was driven by continued broad-based demand strength and American’s completion factor performance in the quarter. Demand was particularly strong in the month of June driven by an increase in close-in bookings. Domestic and short-haul international revenue continue to perform well and the airline has seen noticeable strength in long-haul international demand and yield performance.
In the second quarter, the company produced an operating margin of 15.4% and net income of US$1.3 billion on a GAAP basis. Excluding net special items, American produced net income of US$1.4 billion in the second quarter.
American generated operating cash flow and free cash flow of nearly US$1.8 billion and US$1.2 billion, respectively, in the second quarter. The company reduced total debt by US$387 million in the quarter. Strengthening the balance sheet continues to be a top priority and American is nearly two-thirds of the way to its goal of reducing total debt by US$15 billion by the end of 2025. As of June 30, 2023, American had reduced its total debt by approximately US$9.4 billion from peak levels in mid-2021. The company’s commitment to strengthening its balance sheet is being recognised, as evidenced by Fitch upgrading the company’s rating two notches, to B+. The company ended the quarter with approximately US$14.9 billion of total available liquidity, comprised of cash and short-term investments plus undrawn capacity under revolving and other short-term credit facilities.
Based on demand trends and the current fuel price forecast and excluding the impact of special items, the company expects its third-quarter 2023 adjusted earnings per diluted share to be between US$0.85 and US$0.95. American now expects its full-year 2023 adjusted earnings per diluted share to be between US$3.00 and US$3.75. The company’s forecasts include the estimated impact of anticipated new labour agreements. (£1.00 = US$1.29 at time of publication).
