(Recasts and updates shares, adds CEO comment from conf call)
By Sanjana Shivdas and Tracy Rucinski
Oct 24 (Reuters) – American Airlines Group Inc beat Wall Street estimates for third quarter profit on Thursday thanks to robust travel demand, even as the impact of the Boeing 737 MAX grounding continued to swell.
American trimmed the top end of its adjusted 2019 forecast at $5.50 per share versus its previous forecast range of $4.50 to $6 per share and raised the estimated costs related to the MAX grounding to $540 million for the year.
Still, shares jumped 4.3% in early trading as analysts cheered a strong quarter despite the MAX grounding and an ongoing dispute with its mechanics.
The 737 MAX was grounded worldwide in March after two deadly crashes on Lion Air and Ethiopian Airlines together killed 346 people within five months.
American, which has extended cancellations of 737 MAX flights through Jan. 15, had previously said its 2019 pre-tax income would take a $400-million hit because of the safety ban on the aircraft.
In the latest quarter, American said it took a $140 million hit to its pre-tax income from the ongoing grounding.
Unit costs rose 4.8% in the third quarter, mainly driven by lower than planned capacity due to the Boeing 737 MAX grounding.
American said the third quarter was also affected by ongoing labor contract negotiations.
Chief Executive Doug Parker, referring to the MAX and mechanics dispute, said on a conference call that quarterly results “were hindered by two circumstances that we fully expect to be behind us in 2020.”
Net income rose to $425 million, or 96 cents per share, in the third quarter ended Sept. 30 from $372 million, or 81 cents per share, a year earlier.
Total operating revenue rose 3% to $11.91 billion.
Excluding items, American earned $1.42 per share, above the average analyst estimate of $1.40 per share, according to IBES data from Refinitiv.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil
D’Silva and Nick Zieminski