Investing in a range of new products to entice new and existing customers looks like it is paying off for American Airlines. Its upbeat outlook bodes well for the rest of the year.
Shown a basic economy seat, about half of American Airlines passengers are opting for a main cabin seat instead. The airline’s premium economy seats are likewise doing well.
American is attributing some of its strength in the second quarter to strong uptake in these of newer products. Its basic economy offering is now in 78 markets with around half of customers choosing to buy up to the main cabin when given the option. Take up of the new premium economy offering has also been “strong” and the seats are now being installed on American’s Boeing 777-200 aircraft.
American Airlines Group expects the growth trend in both corporate and leisure travel to continue after reporting a pre-tax profit of $1.3 billion in its second quarter.
The figure was down 13.5 percent year over year as expense increases outstripped revenue improvement.
The company said that it had seen particularly strong performances in its domestic division as well as Central American, South American, and Caribbean regions.
Total Revenue per Available Seat Mile (TRASM), a popular metric for analysing an airline’s unit revenue, is projected to increase by 0.5 to 2.5 percent year-over-year in the third quarter, which, American Airlines President Robert Isom said “reflects continued improvement in customer demand for corporate and leisure travel.”
Revenue during the quarter increased by 7.2 percent to $11.1 billion with operating expenses up 11.1 percent to $9.6 million as fuel prices rose. The company took delivery of 16 mainline aircraft and 4 regional aircraft at a cost of $1.1 billion.
“We are making important long-term investments in our product and our team at American Airlines. Our strong revenue growth is a credit to our more than 120,000 team members and evidence that these investments are working,” said CEO Doug Parker. “Looking forward, we are enthusiastic about our prospects for the second half of 2017, as well as 2018 and beyond.”
American Airlines published its results the day after a major shake-up in the industry was announced with Air France-KLM Group buying a stake in Virgin Atlantic. At the same time American’s U.S. rival Delta Air Lines announced plans to take a 10 percent stake in the Franco-Dutch group.
Photo credit: An American Airlines Airbus A319. The airline group saw its revenue rise but profit fall in its second quarter. American Airlines