American Airlines’ revenue
For 2Q17, analysts expect American Airlines’ (AAL) revenue to record a rise of 5.8% year-over-year (or YoY) to $10.9 billion.
AAL’s revenue is expected to rise 4.8% YoY to $11.1 billion in 3Q17 and 4.5% YoY to $10.2 billion in 4Q17, leading to 2017 revenue growth of 4.3% YoY to $41.9 billion.
This growth will be a relief for AAL after two years of falls. In 2015, its revenue fell 2% YoY to $40.2 billion, and in 2014, its revenue fell 3.9% YoY to $40.9 billion.
Unit revenues rising
After falling throughout 2016, unit revenues are finally looking up for legacy carriers such as United Continental (UAL) and American Airlines. American Airlines’ unit revenue rose 3.1% YoY in 1Q17, and UAL’s rose 0.8% YoY in the quarter.
Other legacy players such as Delta Air Lines (DAL) and Alaska Air Group (ALK) saw their unit revenues continue to fall in 1Q17. DAL’s unit revenue fell 0.5% YoY, and Alaska’s unit revenue fell 5.7% YoY. However, all players are expecting their unit revenues to improve in 2Q17.
At the end of 1Q17, American Airlines had guided for total revenue per available seat mile (or TRASM) growth of 3%–5% in 2Q17. However, better-than-expected yields and reduced fuel costs on account of falling crude prices led AAL to improve its guidance. The company now expects its TRASM to rise in the range of 3.5%–5.5% YoY.
Investors can gain exposure to American Airlines by investing in the PowerShares Dynamic Leisure and Entertainment ETF (PEJ), which invests ~5.5% of its portfolio in American Airlines.