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Airline stocks rise on American Airlines' upbeat forecast


By Rachit Vats

(Reuters) - U.S. stocks rose after Airlines Group Inc on Wednesday became the second major this week to forecast higher unit for the fourth quarter.

Analysts said forecasts for the key performance metric from Airlines, the No.1 U.S. airline, and smaller rival confirm fares are trending higher due to rising fuel costs.

Non-fuel unit cost growth also seems to be reverting to historical levels, according to

Shares of Airlines were up 3 percent and was 6.2 percent higher. The U.S. index <.DJUSAR> was up 2.5 percent.

Airlines said it now expects its total per available seat mile for the quarter to rise about 5-6 percent, compared with its prior guidance of 2.5-4.5 percent. The company also raised its pre-tax margin forecast to 6.5-7.0 percent, from 4.5-6.5 percent.

"The improvement in pre-tax margin is due to better than expected unit in 4Q17," Becker said.

United, the No.3 U.S. airline, said on Tuesday it now expects fourth-quarter passenger unit to be about flat, compared with its previous guidance of down 2 percent to flat.

"We believe that many buysiders were already modelling for something in the -1 percent to flat neighbourhood," said.

"The beat was driven by a combination of stronger overall yields as well as better than expected close-in demand, ordinarily a proxy for Frankly, we're not surprised," Baker said in a note.

United, whose parent is , moved up its pre-tax margin guidance to 6-7 percent, from 3-4 percent.

Shares of were up 2.4 percent. The company is scheduled to report fourth-quarter earnings on Thursday.

(Reporting by in Bengaluru; Editing by and Maju Samuel)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 00:53 IST