American’s First Quarter Profit Down 67 Percent

April 27, 2017

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American Airlines’ first quarter net profit dropped by two-thirds to USD$234 million as fuel costs rose by over 37 percent.

The Q1 net contrasts with 2016’s $700 million profit as pre-tax income plunged 67.4 percent to $365 million in the quarter to end March.

Operating expenses rose 11.4 percent to just over $9 billion, with mainline fuel costs increasing $373 million and staff costs up $173 million. Revenue edged up 2 percent to $9.62 billion.

American carried 46.36 million passengers in the quarter, a 1.2 percent dip from the previous year period. RPM (revenue passenger miles) traffic fell 1.5 percent on an ASM (available seat miles) capacity drop of 1.1 percent. The resulting load factor was 0.4 percentage points down at 79.2 percent.

On a more positive note, passenger yield was up 2.4 percent at 16 cents, and PRASM (passenger revenue per ASM) rose 2 percent.

The Fort Worth-based airline said it has delayed delivery of its order for 22 Airbus A350s by up to two years “to provide widebody capacity flexibility”. It also moved delivery of two Boeing 787-9 aircraft from 2018 to 2019.

On Wednesday, American announced pay increases for its flight crews, with pilots offered an 8 percent average raise and flight attendants a 5 percent boost. The increases will add $230 million to costs for 2107 and $350 million in 2018, the airline said.

Chief executive Doug Parker said of the announcement “As our industry has rapidly evolved and pay increases at other airlines have accelerated, some of our colleagues have fallen behind their peers at other airlines in base pay rates.”

American said it would work with unions to adjust the hourly rates of the two groups “to levels that are equal to the highest rates currently in place at either Delta or United.”