American Airlines outlines expectations for 2Q2018, reveals lower than expected domestic yields

    American Airlines outlined (11-Jul-2018) the following guidance as part of its investor update for 2Q2018:

    • Total pretax items expected to approximate USD215 million, including merger integration, fleet restructuring expenses and mark-to-market adjustments for its investment in China Southern Airlines;
    • Special items include USD26 million in a noncash impairment charge to write off its Brazil route authority intangible asset after the US and Brazil ratified an open skies agreement;
    • TRASM expected to increase 1% to 3% year-on-year versus previous guidance of 1.5% to 3.5%, due to lower than anticipated domestic yields;
    • Consolidated CASM (excluding fuel and special items) now expected to be up approximately 2.5%, compared to 3.5% in previous guidance. The increase is attributable to lower than anticipated maintenance expense and the application of higher airport rent settlement credits;
    • Total available liquidity of UDS7.2 billion, comprised of unrestricted cash and investments of USD4.7 billion and USD2.5 billion in undrawn revolver capacity. American also had a restricted cash position of USD183 million;
    • Repurchased 8.2 million shares at a cost of USD350 million;
    • Fuel price of USD2.24 to USD2.29 per gallon, for a projected consumption of 1146 million gallons;
    • Pretax margin of 7.5% to 9.5%. [more – original PR] [more – original PR – II]