The fuel bill at American Airlines fell by nearly half in the first quarter, helping the company set a record profit despite a dip in revenue.
The combination of cheaper fuel and steady demand for flights within the U.S. is boosting all the major domestic airlines, with American joining Delta, United and Southwest in posting sharply higher earnings.
American Airlines Group Inc. said Friday that net income was $932 million, nearly double last year’s $480 million, the previous record for the quarter.
Excluding one-time expenses, the company said adjusted profit was $1.73 per share, which topped Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was $1.70 per share.
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Revenue fell nearly 2 percent, to $9.83 billion. The airline blamed new flights added by competitors, the strong U.S. dollar, which reduced international ticket sales, and weakness in Latin America.
But expenses fell 7 percent because of cheaper fuel, thanks to the nosedive in oil prices that began last summer.
Spending on fuel at American, US Airways and their regional airlines including American Eagle dropped 42 percent from a year ago – a savings of $1.37 billion, more than the company’s entire profit for the quarter.
The big airlines have held on to most of the fuel savings. They haven’t shared the bounty with passengers through lower fares because travel demand has remained steady and most planes are nearly full at current ticket prices.
The shares were up 78 cents to $52.23 in premarket trading about an hour and a half before the opening bell. At the close of Thursday’s trading they had lost 4 percent since the start of the year after gaining 112 percent in 2014.
American operates its second-busiest hub in Charlotte.