American staged an extraordinary comeback by shrinking its costs in bankruptcy, then greatly expanding its domestic network by merging with U.S. Airways. That combination capped the historic wave of consolidation to create the world’s largest carrier. Under CEO Doug Parker, American’s profits are still waxing: In the first quarter of 2016, operating income rose 9.8%, aided by an almost 30% drop in fuel costs. Still, the tailwinds that propelled American to record earnings are beginning to wane. Though Americans are still flying in record numbers, the steep fall in fuel oil prices, and the robust earnings it produced, has emboldened both major and ultra-low-cost carriers to offer a lot more seats on high-traffic routes, pushing down fares. Many of those new seats are taking flight in American’s best markets. In late 2014, a ban that prevented Southwest from flying most long-haul routes from Dallas’ Love Field was lifted. Since then, Southwest has be offering bargain fares to big cities from American’s home market, and ultra-low-cost carrier Spirit is luring budget travelers as well, forcing American to follow suit on prices. The depression in Brazil and chaos in Venezuela are hitting its big Latin American business. In the first quarter, American’s revenues slipped 4% from the same period in 2015, and its revenue for each seat flown fell 7.5%. Times are still good for American, but a new era of sustained profitability matching the recent peaks is far from certain.
News about American Airlines Group
"We must do everything possible to ensure that no passengers are left behind while seats are empty."
Some 50 million people along the Eastern Seaboard were under storm or blizzard warnings and watches.
More than a foot of snow is expected.