American Airlines Up On Record April Traffic, Upbeat Q2 View

Premier passenger carrier, American Airlines Group Inc. (NASDAQ:AAL) saw its shares rise 4.76% to $47.08 at the close of business on Apr 9, following the release of its traffic report for the month of April. The company witnessed a 3.1% rise in traffic, which is measured in revenue passenger miles (RPMs), to $18.6 billion from $18 billion reported a year ago.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 0.8% to $22.6 billion. Moreover, the load factor or percentage of seats filled by passengers increased to 82.2% from 80.4% in Apr 2016 as traffic growth outpaced capacity expansion.

On a year-to-date basis, the carrier registered a 0.3% decline in RPMs to $69.6 billion, while ASMs declined 0.6% to $87 billion, both on a year-over-year basis. Also, load factor increased 20 basis points (bps) year over year to 80%. Moreover, passenger count (PAX) grew 0.8%, while it declined 0.7% on a year-to-date basis.

American Airlines has raised its projections for the second quarter of 2017. The company expects total revenue per available seat mile (TRASM) growth in the band 3.5%–5.5% year over year. Pre-tax margin (excluding special items) in the second quarter is estimated in the range of 12%–14%. The company’s prior guidance for TRASM was 3%–5%, while that for pre-tax margin was 11%–13%.

The company recently reported first-quarter 2017 results, beating the Zacks Consensus Estimate for both earnings and revenues. The carrier’s adjusted earnings of 61 cents per share beat the Zacks Consensus Estimate by 4 cents. Revenues of $9,624 million edged past the Zacks Consensus Estimate of $9,621.3 million. Airline heavyweights like Southwest Airlines (NYSE:LUV) and Alaska Air Group (NYSE:ALK) have also reported their financial numbers over the past few weeks.

Zacks Rank & Key Pick

American Airlines currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the airline space is Deutsche Lufthansa (DE:LHAG) AG (OTC:DLAKY) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Deutsche Lufthansa have rallied 39.84% on a year-to-date basis.

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