Today, July 12, shares of American Airlines (AAL) closed up 9.98%.
The company announced that it expects to post a pretax profit of $585 million in the second quarter as vacationers pack planes during the summer peak season. The company expects revenue to be about 12% higher than in the same quarter in the pre-Pandemic year of 2019. The Wall Street consensus before the news stood at revenue of $13.3 billion and earnings-per-share of 72 cents.
Airline stocks have been in a steady retreat on fears that logistical problems (such as a shortage of pilots and other crew members) that have caused airlines to cancel thousands of flights would prevent companies from generating higher earnings due to rising fuel costs. American said it paid between $4.00 and $4.05 per gallon in the second quarter. That’s eight cents per gallon more than expected.
American Airlines will report second-quarter revenue and earnings on July 21.
Today’s gain to $14.79 a share is still way below the local high of $18.13 a share that American Airlines hit back on May 27–before airlines started canceling thousands of summer flights. The local low came on June 16 at $12.16.
The stock should have a relatively easy advance to the 50-day moving average at $15.54, but the shares then face serious overhead resistance from the 200-day moving average at $17.58.
Shares of United Airlines (UAL) ended the day up 8.09% and shares of Delta Air Lines closed up 6.32%
Full disclosure: I own Call Options on American Airlines and Delta Air Lines in my personal portfolios.
