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American Airlines Group Inc. will add more seats to some of its single-aisle jetliners as part an effort to boost sales by $1.4 billion in the next few years.
The carrier’s Boeing Co. 737-800 jets will be revamped to fit 12 more passengers while the Airbus SE A321 planes will carry as many as nine more, according to a presentation Thursday. The world’s largest airline also plans to bolster group sales, upgrade technology systems and seek to persuade more customers to upgrade to higher fares.
The plans almost double American’s target for revenue gains by 2021 as the company steps up efforts to expand sales amid rising fuel costs and heightened competition from heavy discounters. While a new fare war broke out in the summer among U.S. airlines, American Chief Executive Officer Doug Parker reaffirmed his view that industry consolidation will enable carriers to post steady profits and leave behind years of boom-and-bust cycles.
“I don’t think we’re ever going to lose money again,” he said at American’s investor day in Grapevine, Texas. “This is an airline and an industry that will be profitable in good and bad years.”
American climbed 1.4 percent to $47.49 at the close in New York, leading a Standard & Poor’s index of the five biggest U.S. carriers. American has advanced 1.7 percent this year, while the broader gauge declined 1.1 percent.
Including the new initiatives and previous initiatives to boost revenue by $1.5 billion, the airline said it expects total improvements of $2.9 billion. It’s also targeting $1 billion in costs thanks to more than 400 projects to increase efficiency.
In the fourth quarter, American will begin revamping some narrow-body planes with new seats, satellite Wi-Fi service, larger overhead bins and power for passenger devices at seats.
The 737-800 jets will go to 172 seats from 160 seats, matching the total for American’s upgraded 737 Max aircraft. The A321 planes will be outfitted to carry 190 passengers. That’s an increase of three for the jets originally from US Airways, which merged with American in 2013, and a gain of nine for the aircraft operated by American before the transaction.
The carrier estimated that standardizing the interiors at a higher seat count will generate about $500 million in revenue through 2021.
American this month reiterated its willingness to “absolutely, positively” match discount fares to compete with Southwest Airlines Co. and heavy discounters such as Spirit Airlines Inc., indicating there would be no near-term end to a price war that reignited this summer.
Parker said he was happy with American’s fleet plans and had no interest in adding new aircraft types. He declined to comment on the U.S. Commerce Department’s decision this week to slap import duties on Bombardier Inc.’s C Series jets. The agency cited unfair Canadian subsidies in announcing the move. Delta Air Lines Inc. ordered at least 75 of the planes last year.
©2017 Bloomberg L.P.