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Impressive June Traffic Numbers for American Airlines

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Updated

Overview

American Airlines Group (AAL) serves destinations in more than 50 countries, and its merger with US Airways makes it one of the most widely operated airlines in the world. In June 2015, American Airlines’ total revenue passenger miles (or RPM) were up by 2.8% year-over-year at 20.4 billion. Its available seat miles (or ASM), or capacity, grew by 2.4% year-over-year to $23.9 billion.

The airline’s total passenger load factor was 85.4%, up 0.4%, compared with June 2014. The company also saw a strong 4.7% year-over-year growth in its cargo traffic.

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American Airlines saw the second lowest growth in both traffic and capacity demand among the six major airlines. AAL’s traffic increased by 2.8%, Alaska Airlines’ (ALK) traffic increased by 6.9%, and JetBlue Airways’ (JBLU) traffic rose by 8.8%. Plus, Southwest Airlines’ (LUV) traffic increased by 6.9%, and Delta Air Lines’ (DAL) traffic rose by 3.2%.

These airlines are a part of the iShares Transportation Average ETF (IYT), which holds ~38% in airline stocks.

Strong growth in Pacific drives key indicators

June saw exceptional growth in the Pacific region. American Airlines’ traffic in the region grew by 20.3% year-over-year, with a capacity growth of 20% year-over-year. This helped in offsetting the weakness seen across Latin America.

Aided by the Pacific region, overall traffic grew by 3%. The airline’s capacity growth was also evident in all markets except Latin America.

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Future expectations trimmed

American Airlines expects its 2Q15 pretax margin to be between 16%–18%. The company expects its PRASM to be down by ~6%–8%, and it reduced its domestic capacity forecast from 2.0%–3.0% to 1.2%.

Capacity cut plans announced

US airline companies have seen good revenues and growing capacity for the past few quarters, benefiting from lower crude prices. American Airlines Group (AAL) recently announced its plans to cut its capacity growth for the rest of the year. The airline also noted that it plans to realize total capacity growth of 1%, in contrast to a previously announced 2% capacity growth.

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