(Reuters) -American Airlines lifted its annual profit forecast on Thursday, on resilient travel demand and improved pricing power as airlines trim capacity, sending its shares up 3% before the bell.
Excess supply of airline seats in the domestic market during the U.S. summer travel season had forced airlines to offer seats at a discount to fill their planes, denting their earnings.
Since then U.S. airlines have moderated capacity. Annual domestic seat growth has slowed to 1.5% in October and November from 5.5% in July, according to BofA analysts.
The company expects an adjusted earnings per share of $1.35 to $1.60, compared with its prior forecast of 70 cents to $1.30.
American is also recovering from a previous sales and distribution strategy debacle. The airline sought to rework its contracts with corporate travel agencies and clients, cutting perks and discounts.
However, this strategy backfired, leading to an exodus of corporate travelers that dented revenue, hurt the airline’s image, and gave its peers an advantage
Since the misstep, the airline has taken several measures to win those corporate clients back. In July, it said it was renegotiating contracts with travel agencies and corporate customers.
The Texas-based carrier reported a net loss of $149 million, or 23 cents per share, compared with $545 million, or 83 cents per share, a year ago.
The airline’s total operating revenue rose 1.2% to $13.65 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Arun Koyyur)
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