American Air Sees Surprise Loss in Break From Bullish Rivals

(Bloomberg) — American Airlines Group Inc. forecast a surprise first-quarter loss, breaking from rival carriers cashing in on unusually strong winter demand and pricier domestic fares.

American anticipates an adjusted loss of as much as 40 cents a share in the current period, the carrier said in a statement as it reported fourth-quarter results. Analysts had expected a 1-cent profit on average, according to estimates compiled by Bloomberg.

The carrier’s shares fell 7.9% before the start of normal trading in New York on Thursday.

The pessimistic forecast contrasts with more bullish outlooks from rivals United Airlines Holdings Inc. and Delta Air Lines Inc. pointing to strong demand for winter trips to Europe and higher domestic ticket prices. American’s extensive domestic network and string of Sun Belt hubs should also give it outsized exposure to a rise in those fares after carriers that cut unprofitable flying last year to cull a glut of seats.

The setback comes at an inopportune time for American. The company has been working for months to win back business customers that walked away last year after a now-abandoned push for corporate clients to book directly rather than third-party travel managers. American has said the misstep cost it $1.5 billion.

American is making slow progress in its effort to regain corporate travel, with its historic share of revenue from that business still down 9% in the fourth quarter. It expects an improvement of 2 percentage points this quarter and said it’s on track to regain the full share of indirect booking revenue by the end of this year.

Fourth-quarter adjusted profit of 86 cents a share topped the 65-cent average of analyst estimates compiled by Bloomberg. Revenue was $13.7 billion, while Wall Street expected $13.4 billion.

(Updates with additional detail from fourth paragraph.)

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