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American Airlines reports loss on costs from new labor contract

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American Airlines reported a loss Thursday on costs connected to a new labor contract, but described travel demand as solid as it lifted its full-year earnings forecast.

The big US carrier reported a third-quarter loss of $149 million. Revenues edged up one percent to $13.7 billion.

The results were dragged lower by one-time costs of more than $500 million due to the ratification of a new collective bargaining agreement with flight attendants.

American Airlines executives said the company was benefitting from an improving pricing environment for carriers after airlines trimmed US plane capacity to address a glut of seats earlier in the year. 

A large amount of unsold seats is a boon for consumers who can purchase lower fares but represents a problem for airlines seeking to maximize profits.

“Demand for American’s product remains strong,” said American Airlines Chief Executive Robert Isom on a conference call with analysts.

Isom said the company has also made progress in restoring programs with travel managers and corporate programs after suffering lost revenue from a failed attempt at direct bookings. 

In May, American ousted an executive responsible for the revamp and said it would pivot back to its traditional system.

In a press release, Isom said the company had taken “aggressive action” to right the booking operation.

“We have heard great feedback from travel agencies and corporate customers as we work to rebuild the foundation of our commercial strategy and make it easy for customers to do business with American,” Isom said.

American lifted its full-year profit forecast to between $1.35 and $1.60 per share, compared with the earlier range of 70 cents to $1.30 per share.

Shares rose 4.4 percent in early trading.

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