American Airlines outlines expectations for 2Q2018, reveals lower than expected domestic yields

12 July, 2018

American Airlines outlined (11-Jul-2018) the following guidance as part of its investor update for 2Q2018:

  • Total pretax items to approximate USD215 million, including merger integration, fleet restructuring expenses and mark-to-market adjustments for its investment in China Southern Airlines;
  • Special items include USD26 million in a noncash impairment charge to write off its Brazil route authority intangible asset after the US and Brazil ratified an open skies agreement;
  • TRASM expected to increase 1% to 3% year-on-year versus previous guidance of 1.5% to 3.5%, due to lower than anticipated domestic yields;
  • Consolidated CASM (excluding fuel and special items) now expected to be up approximately 2.5%, compared to 3.5% in previous guidance. The increase is attributable to lower than anticipated maintenance expense and the application of higher airport rent settlement credits;
  • Total available liquidity of USD7.2 billion, comprised of unrestricted cash and investments of USD4.7 billion and USD2.5 billion in undrawn revolver capacity. American also had a restricted cash position of USD183 million;
  • Repurchased 8.2 million shares at a cost of USD350 million;
  • Fuel price of USD2.24 to USD2.29 per gallon, for a projected consumption of 1146 million gallons;
  • Pretax margin of 7.5% to 9.5%. [more - original PR] [more - original PR - II]