(Bloomberg) -- American Airlines Group Inc.’s shares soared the most in almost four years after the carrier raised its profit expectations for the final months of the year, the latest signal of strong travel demand heading into the crucial winter holidays.
Adjusted earnings will be 55 cents to 75 cents a share in the fourth quarter, up from a prior expectation of no more than 50 cents, the company said Thursday in a regulatory filing. The revised range easily topped the 40-cent average of analyst estimates compiled by Bloomberg.
The outlook joins rosier expectations from Southwest Airlines Co. and JetBlue Airways Corp. this week following record passenger numbers seen over the Thanksgiving holiday. The carriers cited stronger-than-expected bookings this month, as well as higher fares and lower jet fuel prices.
American’s shares jumped as much as 17% as of 12:53 p.m. in New York on Thursday, the most intraday since January 2021. Southwest, United Airlines Holdings Inc. and Delta Air Lines Inc. also saw gains.
The more bullish outlook comes after the industry struggled over the summer in the US market as too much flying capacity held down ticket prices. Southwest on Thursday said it now expects unit revenue to rise as much as 7% in the fourth quarter, up from the airline’s prior forecast for no more than a 5.5% year-over-year gain.
“Holiday bookings are coming in very strong,” Southwest Chief Executive Officer Bob Jordan said Thursday at a Goldman Sachs conference. “It looks like it’s continuing into the first quarter.”
JetBlue on Wednesday said fourth-quarter revenue would decline less than expected previously. Revenue from Dec. 1 flights at United was more than 25% higher than the second-biggest day in its history, CEO Scott Kirby said in a CNBC interview on Tuesday.
American will benefit from slowing its own growth in next year’s first quarter and as rivals including Spirit Airlines Inc. and Alaska Air Group Inc. trim flying plans that overlap with the larger carrier’s route network, Seaport Research Partners analyst Daniel McKenzie said in a report. That “in turn allows American to better manage revenue.”
Credit Card
American also said Thursday it reached an agreement to extend its co-branded credit card agreement with a unit of Citigroup Inc., making the bank the sole issuer of AAdvantage branded cards starting in 2026.
Cash paid to American from Citi and other partners for loyalty award points will increase about 10% annually under the new agreement, the carrier said in a statement. American collected about $5.6 billion in those payments during the 12 months ending Sept. 30, according to a regulatory filing. Growing to $10 billion a year would boost annual pretax income by $1.5 billion compared to 2024, the carrier said, without providing a timeframe for that goal.
“Improved credit card economics were a missing source of revenue that management didn’t discuss given the lack of a deal,” McKenzie said. “Improved economics this morning are unclear, but we’re now comfortable that lost revenue returns slowly.”
The Citigroup agreement pushed out Barclays Plc from a long-standing three-way partnership among the companies. Citigroup will purchase Barclays’ portion of the cards and begin transitioning customers to its platform in 2026, according to the statement.
American was unusual for relying on two credit-card partners. Analysts have long feared that the arrangement held the carrier back from achieving the results that rivals including Delta and United have been able to achieve with their programs.
--With assistance from Jenny Surane.
(Updates shares, adds executive, analyst comments from first paragraph.)
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