American Airlines Upgraded After 4Q Shows Gains

Shares of American Airlines Group Inc. rose Wednesday, after the airline’s latest quarterly results beat Wall Street’s predictions and the stock was upgraded by Bank of America and Raymond James.

Raymond James analyst Savanthi Syth raised the shares to “Outperform” from “Market Perform” and predicted that the company will earn $4.15 per share this year, up from an earlier forecast of $2.95 per share.

Syth cited American’s gains in revenue for every seat flown one mile, a closely watched measure in the airline business, plus expected increases in revenue from extra fees and lower fuel expenses. But she expressed concern about American’s plans to increase capacity by 3.5 percent this year. Airlines have raised average fares by limiting capacity.

Bank of America Merrill Lynch analyst Glenn Engel raised the stock to “Neutral” from “Underperform,” pointing to extra revenue from a new credit card agreement and lower interest expenses after refinancing. He said he was concerned by recent “softening” in large corporate travel bookings, but still raised his 2014 profit forecast to $4 per share, from $2.70 per share.

Another analyst, J.P. Morgan’s Jamie Baker, raised his forecast for 2014 earnings to $5 per share from $4.08 per share and lifted his 2015 prediction too.

Fort Worth, Texas-based American reported Tuesday that, excluding restructuring costs related to American’s bankruptcy reorganization and last month’s merger with US Airways, it would have earned $436 million, or 59 cents per share, in the fourth quarter. That beat analysts’ forecast by 4 cents per share, according to a FactSet survey.

Including the restructuring charges and other one-time items, American reported a loss of $2 billion, but analysts usually exclude items from their calculations.

Combined revenue was $9.98 billion, which beat analysts’ forecast by about $90 million.