American Airlines Group Inc. (NASDAQ:AAL) has reported its third-quarter 2023 financial results, showing a record third quarter revenue.
The US airline Group also provided a confident outlook for the final quarter of the year.
Record Third-Quarter Revenue
American Airlines Group Inc. delivered a strong performance, reporting a record third-quarter revenue of approximately $13.5 billion.
This substantial achievement demonstrates the company’s strong financial performance during this period.
GAAP Third-Quarter Net Loss
Despite the impressive revenue, American Airlines did encounter a GAAP third-quarter net loss of $545 million, which equates to ($0.83) per diluted share.
It’s essential to take this into account while analyzing their overall performance.
Excluding Net Special Items
For a clearer picture, let’s exclude net special items and look at the third-quarter net income. American Airlines Group Inc. recorded an income of $263 million, or $0.38 per diluted share.
This showcases a more positive financial outcome when certain factors are disregarded.
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Remarkable Completion Factor
American Airlines stood out among U.S. network carriers with a remarkable third-quarter completion factor, setting a new standard for the industry.
Strong Liquidity
As of the end of the third quarter in 2023, the company maintained approximately $13.5 billion in total available liquidity. This is a testament to their financial stability and preparedness for the future.
Debt Reduction
American Airlines successfully reduced its total debt by $1.4 billion during the third quarter, a strategic move to enhance their financial position.
Credit Rating Upgrades
Furthermore, the company received credit rating upgrades from prominent agencies, including Fitch, Moody’s, and Standard & Poor‘s, which further validates their commitment to excellence.
Robert Isom, CEO of American Airlines, expressed his satisfaction with the company’s performance, stating, “The American Airlines team continues to produce strong results. Our team is delivering record-setting reliability and operational performance.”
“We are executing on our plans and remain well-positioned for the future, supported by the strength of our network, our young and modern fleet, and our outstanding team.”
Operational Performance
American Airlines delivered a strong operation in the third quarter, with a record-setting performance during the peak summer travel period.
The airline operated more than 515,000 flights, maintaining an average load factor of 84%. Notably, they achieved the best-ever third-quarter completion factor among U.S. network carriers.
The company is committed to building on this momentum and ensuring a reliable operation during the upcoming holiday travel season.
Third-Quarter Revenues
American Airlines Group Inc. generated record third-quarter revenues of approximately $13.5 billion.
This remarkable financial feat was driven by robust demand and record-setting revenue from co-brand credit cards and travel rewards programs.
Corporate and Government Revenue
The third quarter witnessed year-over-year growth in corporate and government revenue, affirming American Airlines’ strength in these sectors.
Additionally, the company continued to experience strong demand and revenue from unmanaged business travel.
Operating Margin
In terms of the operating margin, American Airlines recorded a margin of (1.7%) and a net loss of $545 million on a GAAP basis in the third quarter.
However, when we exclude net special items, they achieved an operating margin of 5.4% and a net income of $263 million. This surpassed the high end of the company’s prior guidance, highlighting their financial resilience.
Debt Reduction Progress
American Airlines is dedicated to strengthening its balance sheet. In the third quarter alone, they reduced their total debt by $1.4 billion, making significant progress toward their goal of reducing total debt by $15 billion by the end of 2025.
As of September 30, 2023, the company had already reduced its total debt by approximately $10.9 billion from peak levels in mid-2021.
This commitment to financial stability hasn’t gone unnoticed. Fitch, Moody’s, and Standard & Poor’s each upgraded the US carrier’s credit rating during the third quarter, underlining the company’s strategic efforts to enhance their financial foundation.
Future Outlook
Looking ahead, American Airlines anticipates a fourth-quarter 2023 adjusted operating margin ranging from 2% to 4%, based on demand trends and the current fuel price forecast.
Moreover, for the full year of 2023, they expect an adjusted operating margin of approximately 7%. This outlook demonstrates their confidence in sustaining and building upon their financial success.
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