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American Airlines Partners With Citi, Issues Strong Profit Outlook

Benzinga·12/05/2024 17:00:16
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American Airlines Group, Inc. (NASDAQ:AAL) shares are trading higher on Thursday after reporting the fourth quarter and full-year outlook.

In an exchange filing, American Airlines said it expects fourth-quarter TRASM to be flat to up 1%, better than the previous forecast of a 1% to 3% decline.

CASM-Ex is projected to rise 5% to 6%, slightly higher than the prior guidance of 4% to 6%, due in part to a higher accrual for profit sharing driven by higher anticipated earnings in the quarter.

American Airlines expects fourth-quarter adjusted EPS of $0.55 to $0.75, much better than the analyst estimate of $0.39 (prior outlook: $0.25 to $0.50).

Also, American Airlines and Citigroup, Inc. (NYSE:C) announced a new agreement for America's co-branded credit card program, set to begin in January 2026.

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Under this partnership, Citi will become the exclusive issuer of American Airlines' AAdvantage credit card portfolio in the U.S.

American Airlines projects that this new agreement will drive a 10% annual growth in cash remuneration from its co-branded credit card and other partners, including customer acquisition and program growth.

For the twelve months ending September 30, American Airlines received about $5.6 billion in cash remuneration from these partnerships, the filing read.

As this figure approaches $10 billion annually, the airline expects its pre-tax income to rise by approximately $1.5 billion compared to 2024.

While American Airlines will not provide regular updates on the performance of these programs, it will continue to factor this growth into future revenue and guidance, impacting its overall financial outlook, the company said.

Price Action: AAL shares are trading higher by 14.08% to $17.08 at the last check on Thursday.

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