FORT WORTH, Texas _ American Airlines said its profit dropped in half for the third quarter as planes weren't as full and income taxes were up.
The Fort Worth-based carrier reported net income of $737 million, down 56 percent from the $1.7 billion profit it reported in the third quarter of 2015. American had a reversal of its tax valuation allowance at the end of 2015 and as a result had to report a $452 million provision for income taxes in the third quarter.
American's revenues also declined 1.1 percent to $10.59 billion as the airline carried 2.7 percent fewer passengers in the quarter. The airline cited competitive capacity growth, a weak global economy and foreign currency weakness as contributing factors to its lower revenues.
Although American saved $200 million on jet fuel, paying an average of $1.48 per gallon, the carrier's salaries and wages for its workers jumped 15.3 percent as American reached new labor agreements that gave raises to its mechanics, ground workers and other employees.
Excluding one-time accounting items, American reported net income of $1.76 per share, which beat Wall Street analysts' earnings estimates of $1.69 per share, according to FactSet Research.
In the press release discussing the earnings, American Airlines chief executive Doug Parker touted the success of the carrier's recent technology cutover where it merged former US Airways pilots and legacy American pilots into one flight operating system.
"With integration successes like this behind us, we are even more excited about the future," Parker said. "We are investing in our people and our product and are well along the path to restoring American as the greatest airline in the world."
Shares of American were down slightly in early morning trading, dropping 63 cents to $40 a share.
