American Airlines first-quarter profit better than forecast

American Airlines first-quarter profit better than forecast

On Friday, American Airlines Group Inc reported first-quarter profit, slightly higher than estimated by analysts. The airline also announced a $0.10 dividend thanks to cheap fuel that helped its bottom line. American is the world's largest passenger carrier.

Last quarter, the airline earned $932 million, approximately double its profit a year earlier. According to Thomson Reuters I/B/E/S, apart from special items, the airline earned $1.2 billion, or $1.73 per diluted share, compared to analysts' average forecast of $1.71 per diluted share.

After their experience in markets where travelers' spending power has been affected adversely by the strong US dollar or the plunging price of oil, its rivals Delta Air Lines Inc and United Continental Holdings Inc said that they will reduce their international service up to some extent outside the peak summer travel season.

Investors gave positive response regarding capacity cuts and are waiting to see whether American will be providing similar guidance during an investor call on Friday morning. According to American, competitive capacity growth, a strong US dollar and economic softness in Latin America led its revenue to drop 1.7% year-over-year to $9.8 billion. Passenger unit revenue dropped to 1.7%.

According to Cowen and Co analyst Helane Becker, they think that share repurchases are among the best ways for making use of the cash windfall from lower jet fuel. The airline also reported a pre-tax profit margin, apart from special items, of 12.7%, within the range of previous guidance.

Chief Executive Officer Doug Parker told employees in a letter, "All of this puts us on a great track to finish the heavy lift remaining in 2015, including the large task of combining our passenger service systems".

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