BofA Expects American Airlines EPS Under Consensus, Trims Price Target

In a report published Monday, Bank of America analyst Andrew Didora previewed American Airlines Group Inc (NASDAQ: AAL)'s second quarter results.

American Airlines is scheduled to report its second quarter results on July 23 before market open. Estimize, the crowd sourced earnings and economic estimates platform, is estimating the airliner will earn $2.70 per share in the quarter (based on four estimates) on revenue of $11.085 billion. This compares to the Wall Street consensus estimate calling for an earnings per share of $2.62 on revenue of $11.016 billion.

Didora pointed out in his note that American Airlines was the first to announce domestic capacity cuts, which is a "good first step" in curbing the unit revenue declines and suggests further commentary about capacity discipline in its quarterly report.

Related Link: Deutsche Bank And Morgan Stanley Preview Airliners

Didora also noted that American Airlines second quarter PRASM (passenger revenue per available seat mile) and pre-tax margins are coming in-line with its guidance offered in June. The company previously said it expects a 6 to 8 percent decline in PRASM and its margins to fall in a range of 16 to 18 percent.

"American Airlines noted no change in demand patterns versus previous commentary as volumes remain relatively healthy with pockets of weakness varying by market," Didora wrote. "Internationally, demand seems to be holding up outside of Brazil and Argentina (but this is nothing new either)."

Didora also estimated American Airlines will report an earnings per share of $2.55 in the second quarter. The analyst revised his full year earnings per share estimate to $9.16 from a previous $9.73 on revenue of $41.9324 billion (also revised lower from a previous $42.5076 billion) to better reflect the company's higher unit cost guide as well as the recent decline in oil prices.

Shares remain Neutral rated with a price target lowered to $48 from a previous $50.