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How Did American Airlines Perform Operationally In January?

Keeping with the trend seen last year, in January 2017, American Airlines continued to grow its capacity in small amounts. While domestically, the capacity was up 0.8%, the company pared its capacity in all international markets, barring Atlantic. The reduction in capacity internationally is likely an effort to control the negative headwinds its unit revenues are suffering from in the region, and manage the excess capacity that has been built into the system. The 110 bps decline in load factor in January is indicative of this excess capacity.

In terms of unit revenues, American expects a rise in the amount of 2.5% in the first quarter of 2017. This is attributable to the capacity discipline the company has been practicing on international routes and the improvement being seen in yields, especially Latin America.

However, the revenue passenger miles and the number of passengers boarded continued to decline in the month. This doesn't bode well for the airline, and may impact its top line negatively. Further, the management said that it expects its pre-tax margin for the first quarter to be in the 3%-5% range, due to higher operating costs and tax expense.

15022017

Have more questions about ( )? See the following links:

Have more questions about American Airlines ( AAL )? See the following links:

  • What Does The Future Look Like At American Airlines?
  • What Could Be The Potential Impact Of Multi-Fold Increase In Passenger Demand On Airlines?
  • How Did American Airlines Perform Operationally In October?
  • American Airlines Q3'16 Earnings Review: Unit Revenues Improve, But Costs Increase
  • American Airlines Q3'16 Earnings Preview: Reduction In Capacity To Partially Offset Lower Unit Revenues
  • Why Are Airline Manufacturers Witnessing A Slowdown In Commercial Orders?
  • Air Traffic Under Closed Economic Policies Due To Hostile Situations: Downside Scenario
  • Air Traffic Under Liberal Economic Policies: Upside Scenario
  • How Will American Airlines Benefit From Its New Fleet Plan?
  • What Are The Factors Behind Soaring Air Travel Growth?
  • How Important Will American's International Operations Be In 2020?
  • How Will American Airlines' Equity Value Move, If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
  • Why Are American Airlines' Domestic Operations More Valuable Than Its International Operations?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for American Airlines

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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