American Airlines profit falls as labor, fuel costs surge

FAN Editor

NEW YORK, Jan 25 (Reuters) – American Airlines on Thursday reported an 11 percent drop in quarterly profit from a year earlier as labor and fuel costs bloated operating expenses, sending shares lower in premarket trading.

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American, the No. 1 U.S. carrier by passenger traffic, reported fourth-quarter net profit of $258 million, or 54 cents per share, down $31 million from $289 million, or 56 cents a share, a year earlier.

The Fort Worth, Texas-based carrier’s shares were down 1.2 percent in premarket trading.

On an adjusted basis, American earned 95 cents a share, topping analysts’ consensus forecast for 92 cents, according to Thomson Reuters I/B/E/S.

In 2017, American stunned investors by offering its pilots and flight attendants a mid-contract pay increase that is set to cost $350 million each year in both 2018 and in 2019.

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As a result, quarterly operating expenses climbed 9.8 percent from a year earlier to $9.9 billion, with a 23.5 percent jump in consolidated fuel expenses and a 7 percent increase in salaries and benefits.

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For the current quarter, American forecasts that total unit revenue will grow 2 percent to 4 percent on the year.

(Reporting by Alana Wise; Editing by Bernadette Baum)

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