How Analysts View American Airlines in 3Q17



Revenue growth

Wall Street analysts expect American Airlines (AAL) to see revenue growth in 2017 after declining in 2016. For 3Q17, its revenues are estimated to grow 4.0% year-over-year (or YoY) to $11.0 billion. This trend is expected to lead to 4.7% YoY growth for 4Q17 to $10.2 billion.

Analysts expect this trend to lead to fiscal 2017 revenue growth of 4.5% year-over-year to $41.9 billion. For 2016, AAL’s revenues fell 2.0% YoY, and its revenues fell 3.9% YoY in 2015.

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For 3Q17, American Airlines’ (AAL) EBITDA[1. earnings before interest, tax, depreciation, and amortization] is expected to grow 2.0% YoY to $2.2 billion. For the third quarter, this growth should come entirely from its increasing revenues. AAL’s EBITDA margins are expected to decline slightly from 20.0% in 3Q16 to 19.7% in 3Q17. 

For 4Q17, AAL’s growth is expected to increase to 15.7% YoY to $1.6 billion. For 4Q17, AAL’s EBITDA margins are expected to expand to 16.1% from 14.8% in 4Q16 and could be a major contributor to its EBITDA growth.

This trend could lead to fiscal 2017 growth of 2.1% YoY to $17.7 billion with an EBITDA margin of 18.3%, which is slightly lower than its 18.7% margin posted in 2016.


For the third quarter of 2017, American Airlines’ (AAL) earnings are expected to fall 14.8% YoY to $1.50 per share due to an 18.4% YoY decline in net profits. For 4Q17, its earnings are expected to fall 4.7% YoY to $0.88 per share due to a 7.9% YoY decline in net profits. 

A portion of the decrease in AAL’s net profit was offset by the declining number of outstanding shares, a result of AAL’s share buyback program.

For fiscal 2017, AAL’s earnings per share (or EPS) are expected to fall 13.4% YoY to $4.95 per share due to a 22% decline in net profits, offset by the declining number of shares.

Investors can gain broad-based exposure to airlines by investing in the PowerShares Dynamic Leisure and Entertainment Portfolio ETF (PEJ), which invests ~5.0% of its holdings in Delta Air Lines (DAL). PEJ also holds 4.9% in United Continental (UAL) and 2.7% in JetBlue (JBLU), but it has no holdings in American Airlines (AAL).


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