American Airlines Group Inc. raised its revenue forecast for the second quarter on Friday, citing a strong pricing environment and pent-up demand for travel as reasons.
Countries have eased COVID-19 restrictions in recent months, making it easier for people to fly again after two years when they couldn’t because of the pandemic. This has led to a rise in bookings at airlines.
American Airlines (NASDAQ:AAL) said it now expects revenue for the quarter to rise between 11% and 13% over what it was before the pandemic. Before, it thought revenue would rise by between 6% and 8%.
But the company, which is based in Fort Worth, Texas, said that fuel costs would go up during the period. It raised its previous estimate of average fuel costs from $3.59 to $3.64 per gallon to between $3.92 and $3.97 per gallon.
Fuel is the industry’s second-biggest cost after labour, but unlike most European airlines, major U.S. carriers don’t hedge against fluctuating oil prices.
American Airlines also said that it expects capacity to be at the low end of its previous guidance range in the second quarter.
The company is sure, though, that higher sales will make up for the higher costs caused by higher fuel prices.
