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Is American Airlines Keeping up with Its Capacity Growth?

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Jun. 13 2017, Updated 9:09 a.m. ET

AAL’s traffic growth

For May 2017, American Airlines’ (AAL) traffic grew at just over 2.6% YoY (year-over-year), which was slightly higher than its capacity growth of just under 2.6% YoY. AAL’s traffic has outpaced its capacity growth in three of the five months in 2017 so far. This a major improvement over its performance last year.

Through most of 2016, AAL’s traffic growth was lower than its capacity growth, and as of May 2017, AAL’s traffic has recorded 0.3% YoY growth.

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Domestic markets

American’s domestic traffic fell 1.5% YoY in May 2017. As of May, its domestic market traffic has fallen 0.3% YoY so far this year.

Pacific driving international markets

AAL’s international traffic growth has come mainly from the Pacific region, followed by the Atlantic region. Pacific region traffic grew 23.3% YoY in May, while the Atlantic region traffic grew 13.6%. Its Latin American traffic grew just 1.6% during the same period.

As of May, AAL’s international traffic has reported growth of 4.2% YoY, most of which came from the Pacific, where traffic has grown 24.6% YoY. The Atlantic region, on the other hand, has grown only 3.6%, while Latin American traffic fell 3.3% YoY as of May 2017.

Outlook

To be sure, the improved global economic outlook bodes well for the travel industry and is expected to contribute to demand growth for major carriers including AAL, United Continental (UAL), Alaska Air Group (ALK), and Delta Air Lines (DAL).

Notably, investors can gain exposure to AAL by investing in the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), which invests 1.3% of its total portfolio in AAL.

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