American Airlines profit beats estimates on lower fuel costs

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(Reuters) – American Airlines Group Inc (O:) beat Wall Street estimates for third quarter profit on Thursday as lower fuel costs boosted margins, but it raised its 2019 cost estimates related to the Boeing (NYSE:) 737 MAX grounding to $540 million.

The U.S. airline, which has extended cancellations of 737 MAX flights through Jan. 15, had previously said its 2019 pre-tax income would take a $400 million hit because of flight cancellations.

The 737 MAX was grounded worldwide in March after two deadly crashes together killed 346 people within five months.

In the latest quarter, American said it took a $140 million hit to its pre-tax income from the ongoing grounding.

The U.S. airline also cut the top end of its 2019 adjusted profit forecast to $5.50 per share. The company had previously forecast a range of $4.50 to $6 per share.

American said net income rose to $425 million, or 96 cents per share, in the third quarter ended Sept. 30 from $372 million, or 81 cents per share, a year earlier.

Total operating revenue rose 3% to $11.91 billion.

Excluding items, American earned $1.42 per share, above the average analyst estimate of $1.40 per share, according to IBES data from Refinitiv.

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