(Boeing)
American Airlines said it lost an estimated $75 million in pre-tax earnings from the three hurricanes that struck the Caribbean and US mainland in August and September; the company’s $624 million net profit for the 2017 third quarter was a 15.3% drop from 3Q 2016.
The airline group’s pre-tax income totaled $1 billion, down 15.6% year-over-year (YOY), producing a 9.2% pre-tax margin, which met American’s post-Hurricane Irma revised guidance issued Sept. 12. American’s 1.1% third-quarter TRASM growth exceeded its guidance forecast by 0.1 point.
In a conference call with analysts and reporters Oct. 26, American CEO Doug Parker and president Robert Isom acknowledged the impact of the hurricanes as well as the Mexico City earthquake, and lauded American’s employees for their disaster relief efforts. The airline canceled more than 8,000 flights as a result of the hurricanes and at the peak of the storm activity canceled all flights at nearly 30 airports.
American’s operating revenue for the quarter was $10.9 billion, up 2.7% over $10.6 billion in the year-ago quarter, attributable, the company said, to strong passenger demand and improving yields. American’s combined mainline and regional yield increased 1.6% during the quarter to 15.51 cents. The company said yield grew in every geographic region for the first time since 2Q 2014, particularly in Latin America. Cargo revenue reached $200 million during the quarter, up 17% YOY.
Operating expenses totaled $9.6 billion, up 5.3% YOY, largely attributable to a 13.3% increase in consolidated fuel expenses and an 8% rise in personnel salaries and benefits. CASM excluding fuel increased 4.5%. The group’s third-quarter operating income was down 13.9% YOY to $1.2 billion.
American’s combined mainline and regional passenger traffic was up 0.9% for the quarter to 60.5 billion RPMs, on 1.6% capacity growth to 73.1 billion ASMs, producing an 82.8% passenger load factor, down 0.5 point YOY.
During the third quarter, American took delivery of five Airbus A321ceos, five Boeing 737-800s and two 787-9s, as well as the airline’s first 737 MAX 8.
American rolled out its basic economy fare program Sept. 5 on its domestic US operations, a seating and fare structure meant to compete with Ultra LCCs.
“Performance [of basic economy] has been in line with expectations with about 50% of customers who received a basic offer choosing to buy up to the main cabin product,” Isom said, adding the revenue impact of the new program is not reflected in American’s 3Q earnings, because of its late rollout in the quarter. The company estimates that approximately 1.5% of its total system revenue comes from fares selling at ULCC price levels.
In its fourth-quarter guidance, American expects TRASM to increase approximately 2.5% to 4.5% and its pre-tax margin excluding special items to be between 4.5% and 6.5%.
During the call, Parker responded to the NAACP’s travel advisory issued Oct. 24, in which the civil rights organization called on African Americans “to exercise caution, in that booking and boarding flights on American Airlines could subject them to disrespectful, discriminatory or unsafe conditions.” The advisory referenced several recent instances onboard American flights the organization said reflected racial bias, and called for “meeting with airlines to discuss troublesome issues.”
“That announcement was obviously a disappointment to our team … we at American pride ourselves on inclusiveness and diversity,” Parker said. “[But] we realized this is a great opportunity … discrimination, exclusion, unconscious biases are enormous problems that no one’s mastered and we would never suggest that we have it all figured out. What we know is we want to keep learning and we want to get even better … and if organizations like the NAACP can help us, we welcome the opportunity to work with them … we are enthusiastic to sit down and learn together. We’ve reached out, and we expect to be working together in the very near term.”
(Mark Nensel - ATWOnline News)
No comments:
Post a Comment