American Airlines beats second-quarter estimate, declares buyback, dividend

[July 24, 2015]  By Jeffrey Dastin

(Reuters) - American Airlines Group Inc on Friday reported second-quarter profit that topped analysts' expectations and declared a stock buyback and dividend as cheap fuel continued to benefit its bottom line.

American, the world's largest passenger carrier, grew profit 97 percent from a year earlier to earn $1.7 billion last quarter. On an adjusted basis, profit was $1.9 billion, or $2.62 per diluted share, compared with the average analyst estimate of $2.60, according to Thomson Reuters I/B/E/S.

The oil glut, which has driven down U.S. crude prices more than 50 percent since June 2014, has been a boon to American because it did not hedge against a price rise. The carrier's fuel bill and related taxes fell to $2.1 billion in the second quarter compared to $3.4 billion a year earlier.

“Reporting the highest quarterly profit in our history is another indication that our team is on the path to restoring American as the greatest airline in the world,” Chief Executive Officer Doug Parker said in a news release, noting the work underway of integrating the company's subsidiaries American Airlines and US Airways, which merged in 2013.

The company announced a $2 billion stock buyback and declared a dividend of 10 cents per share. Sterne Agee CRT analyst Adam Hackel called the share repurchase program "extremely positive."

However, a strong U.S. dollar has depressed demand abroad for travel to the United States, which has hurt the Fort Worth, Texas-based carrier's revenue.

Passenger revenue per available seat mile, a measure closely followed by investors that compares sales to the capacity and distance of flights, dropped 6.9 percent in the second quarter from the prior year. Total revenue decreased 4.6 percent in the quarter to $10.8 billion.

At the same time, unit costs excluding fuel and special items rose 2.6 percent.

(Reporting By Jeffrey Dastin in New York; Editing by Chizu Nomiyama)

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