American Airlines Group Inc. stock rallied to its best in six months following the airline’s surprisingly upbeat guidance.
American AAL, +10.01% rose more than 7% on Thursday, on pace for its highest close since June 7. The rally is also on track to be the largest one-day percentage gain since Oct. 4, when the stock rose nearly 9%.
American surprised Wall Street earlier Thursday by calling for adjusted fourth-quarter profit between $1.12 and $1.17 a share, compared with FactSet consensus of 61 cents a share.
The airline also said it expects to report fourth-quarter revenue growth of 16% to 17%, ahead of an earlier estimate of 11% to 13% growth.
American was already looking at some upside given its smaller exposure to the winter storms, but the new guidance was “well above” expectations, Raymond James analyst Savanthi Syth said in a note.
“We expect (first quarter 2023) revenue and 2023 capacity guides to be top of mind for investors, Syth said.
American’s revenue guidance was “a big upgrade,” Citi analyst Stephen Trent said in his note.
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“This should stem in part, from the deployment of (66 billion) available seat miles, or ASMs,” Trent said. American now expects total revenue per available seat mile, another key industry metric, to increase 24%.
American Airlines’ stock rally also lifted stocks of United Airlines Holdings Inc. UAL, +6.98% and Delta Air Lines Inc. DAL, +3.31%
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American is slated to report fourth-quarter earnings before the bell on Jan. 26. FactSet consensus calls for adjusted earnings of 73 cents a share on sales of $12.8 billion.
Shares of American have lost about 10% in the past 12 months, compared with losses of around 16% for the S&P 500 index. SPX, +0.25%
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