American Airlines Q3 Profit Drops

October 26, 2017

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American Airlines reported a 15 percent drop in third quarter net profit as severe weather events caused the cancellation of over 8,000 flights.

The airline made a USD$624 million profit for the quarter to end September, from $737 million in the previous year period. Operating revenue in the quarter rose to $10.88 billion from $10.59 billion.

Operating expenses were up by 5.3 percent to $9.6 billion as fuel and staff costs rose. Fuel cost 16.1 percent more than in 3Q16, and staff salaries and benefits increased 8 percent. Operating income came in 13.9 percent down as a result, at $1.23 billion.

“Despite the significant operational challenges posed by three hurricanes, our team delivered solid financial results,” American’s chief executive Doug Parker said.

American carried 37.4 million passengers in Q3, a slight drop on last year, as RPM passenger traffic edged up 1.0 percent. ASM capacity rose by 1.3 percent, putting a squeeze on load factor to 83.6 percent, down 0.3 of a percentage point.

Yield rose 1.8 percent to 14.12 cents, and revenue per ASM 1.5 percent to 11.81 cents. The cost per ASM, however, was up by 3.5 percent to 12.37 cents.

Parker said of the results “We are playing the long game at American to create value in an industry that has been fundamentally transformed.”

Looking forward, American said revenue per available seat mile will increase in the 2.5 to 4.5 percent range, and pre-tax margin excluding special items is expected to be between 4.5 and 6.5 percent higher.