Higher Domestic Fares Boost American Airlines’ Outlook

  • Skift Take
    Those last-minute walkup fares on domestic trips are a bonanza for airlines such as American. The airline tightened capacity and raised some fares to offset soaring fuel prices.

    American Airlines Group Inc. revised a key measure of pricing power to the high end of its previous forecast last quarter even as disruptions from Hurricane Florence reduced pretax profit by $50 million.

    Revenue from each seat flown a mile rose about 2 percent to 3 percent from a year earlier, mainly because of higher fares on domestic tickets sold just before travel, the airline said in a statement Tuesday. American had said the gain could be as little as 1 percent. Florence forced the grounding of 2,100 flights as it moved through the Southeast, causing widespread flooding.

    Key Insights

    • American’s report indicates it is getting a firmer grip on airfares. Airlines have cut capacity — paring the number of flights and seats available — in the hopes that a tighter supply will give them power to raise ticket prices.
    • American and other U.S. airlines have been trying to offset a 38 percent jump in jet-fuel prices over the past 12 months, and the carrier said its average cost rose to as much as $2.33 a gallon last quarter.
    • The airline stuck with its forecast to earn $4.50 to $5 a share this year. American had cut its outlook twice this year.

    Market Reaction

    • American rose 1.4 percent to $36.40 in New York premarket trading. The shares had dropped 31 percent this year through Monday, easily the worst on a Standard & Poor’s index of the five biggest U.S. carriers as American cut its outlook and trailed rivals on profit margin and on-time performance.

    Report Details

    • American reiterated its expectation for pretax margin of 5 percent to 7 percent. Costs for each seat flown a mile, a measure off efficiency, will still be up about 1 percent in the third quarter, excluding fuel and other items.

    ©2018 Bloomberg L.P.

    This article was written by Mary Schlangenstein from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

    Photo Credit: American Airlines boosted its outlooks despite the adverse impact of Hurricane Florence. Bloomberg
    Subscribe Now

    Already a member?

    Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)

    Your story count resets on {{monthly_reset}}

    Subscribe Now

    Up Next


    JetBlue-American Partnership Draws Scrutiny of U.S. Senator Over Airfares

    An increase in airfares could contribute to reducing airline passenger numbers. That would be another blow for an industry still suffering from damage caused by Covid variants.

    Online Travel

    Google’s Ticketing for Attractions Off to Rough Start

    Google's attractions ticket beta has been among its least elegant in travel to date. This has angered many tour operators because it couldn't have come at a more inopportune time.

    Online Travel

    CheapOair Is Now Enrolling Flyers in AA Advantage

    American Airlines gave CheapOair a vote of confidence in permitting the online travel agency to enroll AA Advantage members. Look for more online travel agencies to establish these types of deals.