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American Airlines’ Capacity Outpaced Its Legacy Peers in August

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American Airlines’ capacity

American Airlines’ (AAL) capacity grew 3.2% year-over-year (or YoY) in August 2017, significantly higher than its 0.4% YoY growth seen in the previous seven months. Its capacity was also higher than its legacy peers.

Year-to-date (or YTD), AAL’s capacity has grown 0.8% YoY. This is still lower than its total capacity growth for fiscal 2016, which was 1.8% YoY.

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Domestic capacity

For August 2017, American Airlines’ (AAL) domestic capacity increased 1.5%. AAL’s peers Delta Air Lines (DAL), United Continental (UAL), and Alaska Air Group (ALK) also saw increased domestic capacity.

However, American Airlines has mostly been reducing its domestic capacity in 2017 while increasing its international capacity. YTD 2017, AAL’s domestic capacity has fallen 1.3% YoY.

International capacity

AAL’s international capacity rose 5.7% YoY, primarily due to the 12% YoY increase in its Pacific region capacity. Its Atlantic region capacity rose 6.0% YoY in August 2017, and its capacity in the Latin America region rose 4.1% YoY.

Outlook

For 2017, American Airlines expects its capacity to grow 1.5% YoY, driven mostly by the international markets. Its domestic capacity is expected to remain flat in 2017, and its international capacity is expected to grow 4% YoY. 

This trend is in line with AAL’s plan of becoming a relevant player in the Asia-Pacific market, an improvement from the distant third position it currently holds after UAL and DAL.

Investors can gain broad-based exposure to AAL by investing in the PowerShares Dynamic Large Cap Value Portfolio ETF (PWV), which invests 1.6% of its portfolio in AAL.

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