(Reuters) – American Airlines (NASDAQ:) Group Inc on Tuesday forecast a smaller-than-expected fall in fourth-quarter revenue, sending shares of the No. 1 U.S. carrier was up around 2% prior to the bell.

It said that revenue will be down by 17% in the current quarter, as opposed to its earlier expectation of about 20%.

The Omicron variant of COVID-19 has been rapidly increasing and airlines have had to cancel flights because cabin crew members and pilots became sick.

American Airlines expects higher fourth quarter costs due to mass cancellations during the New Year and Christmas holidays, as well as higher incentive payments for employees.

The company expects cost per available seat mile—the standard measure in the industry showing what it costs to fly one seat one mile—to be up between 13% and 14%, compared with its previous guidance of a rise of between 8% and 10%.

Additionally, excess spare parts inventories were written down which increased the costs of operations.

According to the company, pretax margin is expected to decline between 12 and 13 percent, as opposed to the 16% to 18% range.

On Jan. 20, the company will release its financial results.