Last quarter AA beat analyst’s estimates reporting earnings of 0.03 instead of the 0.00, and AA also beat the expected Q3 revenue by reporting 5.8 billion instead of the estimated 5.54 billion. According to AA, management has made efforts to lower their $8.3 billion debt by concentrating more of their efforts towards developing products that can be used in the aerospace industry. These efforts are in response to declining aluminum prices which are down from that of the previous year. By cutting their debt, AA is attempting to offset the negative impact of lower aluminum prices. The fourth quarter results for AA will likely reflect the previous movement of aluminum prices. AA uses the London Metal Exchange’s (LME) aluminum prices to gauge their own prices. According to Bloomberg the current LME three month price for aluminum is $2,065 USD per metric ton. The current price for aluminum is down from the previous December high, which was around $2150. Aluminum prices have bounced back from the October levels, which fell below $1900 USD per metric ton. The chart below displays the LME price graph for buyers of aluminum from the start of Q4 to today. AA is standing by their claim that the demand for aluminum will double by 2020. AA’s shares are up approximately 15% from November. AA closed at $9.10 on January 7, 2013, and is up 0.03 in the after-hours session of trading.
Author: Tyler Sciortino
Current Student at Roosevelt University, Majoring in Finance.
Contact for questions or inquiries at tsciortino@mail.roosevelt.edu