American Airlines says fares rising quickly

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American Airlines Reagan airport Washington DC [Credit: JL IMAGES/Shutterstock.com]
American's revenue for the first quarter was $4.01 billion, down 62.1% from 2019. Photo Credit: JL IMAGES/Shutterstock.com

American Airlines airfares are increasing quickly according to chief revenue officer Vasu Raja. 

At the beginning of the January fiscal quarter, fares were roughly half what they had been a year earlier, Raja explained during the carrier's Thursday earnings call. But heading into the summer, fares have increased to roughly 90% of 2019 levels. In leisure markets, such as Las Vegas, Florida and Mexico, the carrier is achieving yields of 95% to 100% of 2019 levels, Raja added. (Airlines define yield as their average revenue per passenger mile flown.) 

Nevertheless, said company president Robert Isom, business demand is still just 20% of the 2019 level, although a number of corporate clients are telling American that they'll be putting people back out on the road in the September quarter.

The current domination of short-haul leisure travel over business and long-haul flying is sharply reflected in American's upcoming capacity plan. Overall, the carrier expects to fly 90% of its 2019 seat capacity in the third quarter, up from 80% during the current quarter, Isom said. But 85% of the flying will be in the domestic market, with a particularly high volume allocated to flights through American's Dallas-Fort Worth and Charlotte hubs, where the seat offering is slated to be equal to what American flew in 2019. 

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American will allocate an additional 12% of its flying to Latin America, with an emphasis on short-haul flying in Mexico and the Caribbean. 

Meanwhile, the carrier expects to fly just 40% of the long-haul seats this summer that it flew in 2019, and only 3% of its seat capacity will cross the Atlantic or the Pacific. 

"Even if markets were to reopen, so much of the actual window for booking for summer has already passed us by," Isom explained.

For the March quarter, American reported a net loss of $1.25 billion. The figure would have been much larger if not for the $2.1 billion in federal payroll support that American received last quarter. 

American's revenue for the first quarter was $4.01 billion, down 62.1% from 2019 and $30 million below analyst expectations, according to the investment website Seeking Alpha. Looking ahead, the carrier expects revenue for the current quarter to be off 40% from the second quarter of 2019. 

American realized cash burn of $27 million per day during the first quarter, a figure that dropped to $4 million by March. Daily cash burn was positive in March once adjusted to remove $8 million per day in debt principal and severance payments. 

In midday trading, American stock was roughly level with its Wednesday afternoon closing price.

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