American Airlines has joined JetBlue and Southwest Airlines in uplifting its Q4 guidance, with the airline saying that the pricing and revenue environment has continued to improve since its prior guidance in October.
On December 5, American Airlines joined JetBlue and Southwest Airlines in announcing that due to current market dynamics, it had to revise its Q4 guidance upward.
“The pricing and revenue environment has continued to improve since the Company’s prior fourth-quarter guidance issued on October 24, 2024.”
As a result, its total revenue per available seat mile (TRASM) should now either stay flat or improve slightly by 1% year-on-year (YoY), compared to its previous guidance of unit revenues decreasing by 1% to 3% YoY.
While the guidance for cost per ASM, excluding fuel (CASM-ex), has risen slightly, from a range of 4% to 6% to 5% to 6%, in part, its costs will increase due to “a higher accrual for profit sharing driven by higher anticipated earnings in the quarter.”
Thus, American Airlines’ Q4 adjusted earnings per diluted share (EPS) should be between $0.55 and $0.75, compared to its previous guidance of $0.25 to $0.50, meaning it could be above the prior guidance range’s high end.
The three airlines, namely American Airlines, JetBlue, and Southwest Airlines, were wary about their Q4 results when the trio presented its guidance, typically with their Q3 results in October.
For example, American Airlines, which posted a $149 million net loss in Q3 – and a nine-month net profit of $256 million – warned that while October and December should be strong months, there had been some softness around the election and Halloween, according to statements made by Robert Isom, the chief executive officer (CEO) of American Airlines, during the company’s Q3 earnings call.
“But the fourth quarter as a whole, strong October, some weakness in early parts of November as a result of Halloween and the election. Not unexpected. And in the fourth quarter, we see a lot of strength, I'm sorry, as we move to December, see a lot of strength around the holidays, see a lot of strength over Thanksgiving as well.”
Isom concluded that the airline had to be aware of the weakening demand around the election and Halloween.
Meanwhile, Marty St. George, the president of JetBlue, said that while underlying trends from Q3 have continued into Q4 so far, the airline expected unit revenue growth to remain positive and sequentially consistent when adjusting for the CrowdStrike benefit in Q3 and the negative impacts of Hurricane Milton and the election in Q4.
JetBlue detailed that the CrowdStrike outage improved revenue per ASM (RASM) by 1% in Q3, while Hurricane Milton and the election were supposed to impact RASM by 1% each.
Southwest Airlinespresident and CEO Bob Jordan, whom Elliot Investment Management (Elliott) wanted to remove before the two sides reached a deal in October, said during the carrier’s Q3 earnings call that the airline has created several schedules to adjust for lower demand periods.
This included the anticipated election. At the same time, Southwest Airlines has planned to increase flight activity to capitalize on peak holiday demand in Q4.
On the same day, American Airlines announced that it had signed an exclusive agreement with Citigroup, which, starting in January 2026, would result in Citi becoming the sole provider of the AAdvantage co-branded credit card portfolio in the US.
“As a result of the new agreement and based on our current projections, including current macroeconomic assumptions and new customer acquisition and other program growth, American presently expects cash remuneration from its co-branded credit card and other partners to grow by approximately 10% annually.”
Between September 2023 and September 2024, American Airlines' cash earnings from its co-branded credit card and other partners were around $5.6 billion, with the remuneration approaching $10 billion annually, resulting in a projected pre-tax income benefit of around $1.5 billion.
