Dallas - American Airlines' fourth- quarter profit exceeded analysts’ expectations on plummeting jet fuel prices and strong domestic travel.
Adjusted earnings rose to $2 a share, compared with the $1.97 average from 15 analyst estimates compiled by Bloomberg. Sales dropped 5.2% to $9.63bn, missing the $9.65bn expected by analysts.
The world’s largest airline benefited more than rivals from the drop in jet-fuel prices because it didn’t lock in rates in advance. That practice, known as hedging, forced carriers including Delta Air Lines and Southwest Airlines to pay above market rates for fuel as the average spot price in New York dropped 50% in the fourth quarter from a year earlier.
American adopted the non-hedging policy of merger partner US Airways when the carriers combined in December 2013, shutting out its final contract the next year.
Shares rose 2% to $38.90 in premarket trading.
Fourth-quarter adjusted profit advanced to $1.29bn from $1.1bn a year earlier. The latest figure excluded a $3bn noncash benefit related to the reversal of a tax valuation allowance, a $592m charge to write off Venezuelan currency held by the airline and $450m of merger-related costs.
American’s decision to match ticket prices offered by discounters helped erode revenue as its average fare per mile declined 8.9%.
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