American Airlines (AAL) Provides Optimistic Update on Q1

·2 min read

With air-travel demand picking up the pace in the United States following a decrease in coronavirus cases and the increase in vaccinations, American Airlines’ AAL management provided an improved outlook for the first quarter of 2021.

In a SEC filing, management of this Fort Worth, TX based carrier stated that it now expects system capacity (measured in available seat miles) for the March quarter to decline roughly in the 40-45% band from the levels achieved in first-quarter 2019. Earlier, the expectation was a decline of 45% for capacity from the first-quarter 2019 reading. Management, however, refrained from issuing capacity guidance for the June quarter.

On another positive note, management stated that bookings (with respect to domestic markets and short-haul international flights) recently improved. Notably, bookings were hampered in the early part of the March quarter of 2021 due to the order imposed by the Centers for Disease Control and Prevention pertaining to the requirement of testing negative for COVID-19 to qualify for an entry into the United States

Reflective of this betterment, the seven-day moving average as of Mar 26 with respect to the net bookings at the currently Zacks Rank #3 (Hold) American Airlines, was roughly 90% of the level recorded in 2019. Moreover, the reading related to domestic load factor (% of seats filled by passengers) was nearly 80% in the period, further mirroring the recovery in air-travel demand.

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Despite limited visibility stemming from forward bookings, management at American Airlines on an optimistic note presently expects the current booking strength to continue through the second-quarter end.

American Airlines apart, the likes of Southwest Airlines LUV, United Airlines UAL and JetBlue Airways JBLU gave encouraging projections for the March quarter owing to the uptick in air-travel demand in the United States.

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