American Airlines tops Street 4Q forecasts
FORT WORTH, Texas - American Airlines is logging record profits and rewarding shareholders just one year removed from bankruptcy court and a big merger.
The airline is getting a lift from lower fuel prices and steady demand for travel and CEO Doug Parker says 2015 is shaping up as another strong year.
American Airlines Group Inc. said Tuesday that fourth-quarter net income was $597 million, reversing a $2 billion loss a year earlier.
Excluding one-time costs such as expenses to combine American and US Airways, the company earned a record $1.1 billion, or $1.52 per share. That was a penny better than expected by analysts, according to Zacks Investment Research.
Airlines are getting a windfall from lower fuel prices, which they are keeping instead of sharing with passengers through lower ticket prices. American will benefit particularly because it doesn't hedge against higher fuel prices. That means it takes some risk in case oil prices spike, but it captures more of the bonanza when oil prices fall, as they did in late 2014.
American and US Airways cut their fuel bill by 17.6 percent, and regional affiliates also saved at the pump. That more than offset a 4.2 percent increase in labor costs.
Shareholders are getting the payoff. In the second half of 2014, American spent $1 billion buying back its own stock, which makes remaining shares more valuable. The company announced Tuesday that it plans to buy back another $2 billion in stock and pay another quarterly dividend; 10 cents per share.
American seems able to afford those payouts - excluding one-time items, it earned a record $4.2 billion in 2014.
Parker called it a "fantastic first year for our merger." The results, plus the economic outlook, "give us confidence that 2015 will be another outstanding year for American Airlines," he said in a statement.
The year-ago fourth-quarter loss was weighed down by $2.4 billion in items related to American's 2-year bankruptcy case and the merger.
Fourth-quarter revenue was $10.16 billion, up 2.1 percent and slightly higher than Wall Street's forecast of $10.14 billion, according to Zacks.
American Airlines shares have risen slightly more than 3 percent since the beginning of the year. The stock has risen 82 percent in the last 12 months.
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David Koenig can be reached at http://twitter.com/airlinewriter