American Airlines’ capacity
American Airlines’ (AAL) capacity grew by 2.3% YoY (year-over-year) in July 2016—similar to the growth seen in most of 2016. Its capacity has grown by 2.7% year-to-date. This is higher than its total capacity growth in fiscal 2015—it was 1.1%.
Airline capacity is measured using available seat miles. The available seat miles are calculated as the number of seats available with the number of miles.
This led to increased competition—it had a negative impact on yields.
American Airlines’ international capacity rose by 1.7% mainly due to the 29% YoY increase in the Pacific region. The Atlantic region’s capacity fell by 0.2% YoY in July 2016. The Latin American region’s capacity fell by 4.6%.
For 2016, American Airlines expects its capacity to grow by 2%—driven equally by growth in the domestic and international markets. Both the domestic and international capacity are expected to grow by 2%. This is in contrast to the earlier plan of growing international capacity by 6%. It aimed at making American Airlines a relevant player in the Asia-Pacific market. Currently, it’s third after United and Delta.
Investors can gain exposure to American Airlines by investing in the PowerShares Dynamic Large Cap Value Portfolio (PWV). PWV invests 1.6% of its portfolio in American Airlines.