American Airlines share price rises three per cent as it beats expectations helped by cheaper fuel as a result of weak oil price
Shares in American Airlines were up by over three per cent in early US trading after the carrier reported a better-than-expected profit in the three months to 30 June, boosted by lower fuel prices.
Net income plunged 44 per cent to $950m (£726m) as provisions for income tax surged to $543m from $15m, and excluding exceptional items, profit dipped to $1.77 per share from $2.62 – but still came in well ahead of anaylsts' expectations of $1.68.
Operating revenue was down by 4.3 per cent to $10.36bn, from £10.83bn.
The airline said operating costs were down by 3.3 per cent in the quarter, to $8.61bn, helped along by a drop in fuel prices as a result of the persistent weak oil price.
The firm said its mainline and regional fuel expense totalled $1.6bn in the second quarter, which was $530m – 24.9 per cent – lower than in the same period of 2015.
American added that, as of June 30, 2016, it did not have any fuel hedging contracts outstanding to hedge its fuel consumption. "As such, and assuming we do not enter into any future transactions to hedge our fuel consumption, we will continue to be fully exposed to fluctuations in fuel prices," the company said. "Our current policy is not to enter into transactions to hedge our fuel consumption."