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American Airlines Faces $50 Million Income Hit Due to Hurricane Florence

Oct. 10, 2018
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2 min read
American Airlines Plane at Venice Marco Polo Airport in Italy - August 2018
American Airlines Faces $50 Million Income Hit Due to Hurricane Florence
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With Hurricane Michael charging toward the Florida panhandle, American Airlines is just now starting to wrap its arms around the impact of the last major storm to strike the US mainland. A week after Delta shot out an investor update alerting the world that it expects a roughly $30 million loss from disruptions associated with Florence, American has issued an investor update of its own that highlights a $50 million pre-tax income hit from the same hurricane.

To quote the Form 8-K: In September, the company cancelled approximately 2,100 flights due to the impact of Hurricane Florence. These cancellations reduced Q3 revenue by approximately $55 million and TRASM (total operating unit revenue) by approximately 50 basis points. Taking into account lower costs due to fewer departures, the negative impact to pre-tax income was approximately $50 million.

Despite the impact from Hurricane Florence, American Airlines now expects "its third quarter total revenue per available seat mile (TRASM) to be up approximately 2.0 to 3.0 percent year-over-year vs. previous guidance of up 1.0 to 3.0 percent."

That nugget wasn’t enough to assuage concerns from Wall Street, as the airline’s stock fell to its lowest point in more than two years, landing at $33.55 when markets closed on Tuesday. Compounding concerns is the rise of the cost of fuel. AA stated that it paid between $2.28 to $2.33 per gallon for fuel in the quarter, which is around six cents higher than it expected and forecast back in July.

It’s worth noting that American donated $1 million to the American Red Cross to assist with rebuilding efforts following Hurricane Florence, and it has initiated a weather waiver program for a growing array of airports as Hurricane Michael inches closer to making landfall later this week.

H/T: The Associated Press

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