American Airlines Group Inc. lifted its revenue forecast for the second quarter on Friday, citing the boost from pent-up demand for travel and a strong pricing environment.
Airlines have in recent months enjoyed a surge in bookings as countries ease COVID-19 restrictions, encouraging people to take to the skies after two years of the pandemic-restricted travel.
American Airlines said it now expects revenue for the quarter to rise between 11% and 13% over pre-pandemic levels, compared with its prior view of a 6% to 8% increase.
But the Fort-Worth, Texas-based carrier warned that fuel costs would rise in the period, lifting its expectation for average fuel expenses to between $3.92 and $3.97 per gallon, from its previous forecast of $3.59 to $3.64 per gallon.
Fuel is the industry's second-biggest expense after labor, but major U.S. carries do not hedge against volatile oil prices like most European airlines.
American Airlines also said it expects capacity in the second quarter to be at the low end of its prior guidance range.
The company, however, is confident that higher revenue will offset the rise in costs caused by steeper fuel prices, it said.
© 2022 Thomson/Reuters. All rights reserved.