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American Airlines Damage With Jet Fuel Costs

is struggling to recover heavy fuel costs and make the world's largest operator in addition to competitors who have raised…

is struggling to recover heavy fuel costs and make the world’s largest operator in addition to competitors who have raised ticket prices and charges to increase profits.

Another $ 750 million in fuel costs pulled US profits down 48% in the third quarter, the carrier based in Fort Worth, Texas, said Thursday. Hurricanes that hit the southern US also hurt American business.

Other airlines, on the other hand, have stopped before rising fuel costs. Some earn more from high paying business travelers, while most carriers have picked up luggage or change fees. These increases are as American consumers pay more for a variety of goods and services.

Delta Air Lines
Inc.


DAL 3.98%

said earlier this month that third quarter earnings rose 1

3% to $ 1.3 billion from a year earlier.

United Continental Holdings


UAL 3.95%

said profits increased by 30% to $ 836 million in the quarter and

Southwest Airlines
Co.


LUV -7.25%

said Thursday that its profit rose 17% to $ 615 million during that period.

“We really do not like our profits to fall more than others,” said US boss Doug Parker during a conversation Thursday with analysts and reporters.

Mr. Parker said US was updating technology that has hampered the sale of premium seats and additional services, fleet simplification and trimming of unprofitable international flights.

“We know what we need to do,” he said.

Shares in US increased by 8.3% by Thursday, due to the airline’s forecast of unit revenue increased as much as 3.5% in the fourth quarter. The shares in the southwest were 6.6 percent after the airline warned for their fuel costs will rise at least 3 percent next year.

“We just do not see the efficiency of our business as we really need to see “, CEO Gary Kelly told CNBC.

Southwest’s fuel harbors helped isolate it from higher prices. Liability companies have also found ways to compensate an increase of about 40% of jet fuel prices over the past year. Delta said it could recover 85% of its fuel estimate increase, while United said it compensated about 100% of its higher costs. The US said it recovered 40 percent of the fuel price increase through higher prices and charges in the third quarter.

Investors and analysts have examined US debt burden, profit margins and weak income development. They also point to increased competition when United expands, and US strong exposure to economically troubled regions like Latin America.

“They have more exposure to weaker markets and less exposure to stronger markets,” says analyst Joe DeNardi, Stifel. 19659013] Mr. Parker has said that Americans should earn an average of $ 5 billion in prepaid income each year. As of September 30, the carrier had earned about $ 1.5 billion before tax in 2018.

A difficult peak season was not helpful. In a US air travel record, US retirement rates were lowered on departure times and interruptions in July, according to government data.

American misconduct complicates its ability to win business customers who provide reliability and are willing to pay a little more for it, said JPMorgan Chase & Co. analyst Jamie Baker. Delta and United reported partly higher revenue growth due to higher paying business travelers.

American has not lost market share with corporate customers, says carrier Isom.

“We know we need to do better and we will,” he said on Thursday’s conversation.

In recent years, American has borrowed to pay for a review of its aircraft fleet. US debt totaled USD 24 billion at 30 June, more than 3.5 times its 2017 earnings before interest, taxes, depreciation and amortization. By contrast, Dell’s total debt of $ 9.3 billion on September 30 was approximately 1.1 times as high as the profit margin.

While US debt has relinquished many investors, the major expenses for new aircraft are largely completed, while other carriers are still replacing their fleet, Cowen & Co. says. analyst Helane Becker.

Some investors say that the steep decline in US stocks has been a overreaction.

“We see it as a great opportunity,” says Patrick Kaser, a portfolio manager at Brandywine Global, who recently purchased US stocks. “We are big holders and we have added the position.”

US reported $ 341 million, or 74 cents per share, from $ 661 million, or $ 1.36 per share, the same period the year before. Excluding special items, earnings per share were $ 1.13, according to analysts’ estimates, according to FactSet. Revenue increased by 5% to a record of $ 11.6 billion.

Southwest said sales increased 5.1% in the quarter. The profit was $ 1.08 per share and analysts’ expectations were expected to be 2 cents per share.

Write to Andrew Tangel on [email protected] and Alison Pages at [email protected]

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