American Airlines Profits Helped by Lower Fuel Costs

American Airlines Group Inc. said its profits continued to benefit from lower fuel prices, but revenue was hurt by weakness in Latin America.

Shares rose 1.2% to $40.47 in premarket trading as profit beat Wall Street estimates. American Airlines also said it authorized a new $2 billion share buyback program that will expire at the end of next year.

During the quarter ended March 31, the airline saw its fuel cost plunge 33%. At the same time, American's unit revenue—the amount it takes in per seat flown a mile—declined 7.3% in the quarter, while overall revenue fell 4%. American and other airlines have faced questions over sagging revenue despite high earnings.

American Airlines said revenue fell because of competitive capacity growth, continued macroeconomic softness in Latin America and foreign currency weakness. In Latin America, passenger revenue per available seat mile declined 17%.

The company posted a profit of $700 million, or $1.14 a share, down from $932 million, or $1.30 a share, a year prior. Profit in the quarter was hurt by an income-tax provision of about $400 million. Adjusted earnings, which still include the income-tax provision, fell to $1.25 a share from $1.73.

Revenue slipped 4% to $9.44 billion.

Analysts surveyed by Thomson Reuters forecast per-share earnings at $1.19 a share on revenue of $9.44 billion.

Salary and benefit costs rose 12%, and the number of full-time employees increased 2.9% to 120,200.

American Airlines said it obtained 28 new aircraft while retiring 22 during the quarter. American said it expects that over the next year that the average age of its mainline fleet will fall below 10 years.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

April 22, 2016 08:55 ET (12:55 GMT)

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