American forecasts Q2 profit on soaring travel demand, airline stocks rally

American Airlines on Thursday forecast a second-quarter pretax profit as strong bookings help it cover soaring fuel costs, the latest airline to report robust travel demand is outpacing expenses. American, the country’s largest airline, said March was the first month since the Covid pandemic began that its revenue surpassed 2019 levels and said bookings have continued to rise. The carrier forecast second-quarter sales as much as 8% higher than the same period three years ago even though it plans to fly between 6% and 8% less than its schedule for the same three months of 2019. That’s still a more fully recovered schedule than competitors Delta Air Lines and United Airlines, which have been more conservative about restoring capacity throughout the pandemic. American forecast business travel revenue will be 90% recovered to 2019 levels in the second quarter, led by small and midsize companies. “I’m a new CEO. People want to come and see me. It’s the same thing in the rest of the economy,” new CEO Robert Isom said Thursday. “People have been cooped up too long, relationships have faded, and they need to be reestablished.” American is the third major airline to report quarterly results so far this month. United said Wednesday it expects to return to a profit this year thanks to a surge in bookings and fares, echoing similar comments a week earlier from Delta. In March, US domestic airfares rose 20% from 2019 and bookings rose 12%, according to the Adobe Digital Economy Index. Newer data suggests at least a recent slide in demand. In the first 15 days of April, domestic bookings fell 2% as compared with the last 15 days of March though revenue only fell 1%, Adobe Analytics data showed. That was the first two-week period so far this year that bookings dropped compared with the previous 15-day period.<br/>