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United States of America
- Main hub
- Dallas/Fort Worth International Airport
- United States of America
- Business model
- Full Service Carrier
- Domestic | International
- Airline Group
- Part of American Airlines Group Inc.
- Frequent Flyer Programme
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- Codeshare Partners
- Air Tahiti Nui
American Airlines is a wholly-owned airline subsidiary of American Airlines Group Incorporated. With hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, Washington DC and Tokyo, American Airlines operate an extensive network including domestic and regional services within North America and international services to Europe, Asia Pacific, Central America and South America. The carrier was incorporated from The Aviation Corporation, formed into American Airlines in 1934. The carrier was the founding member of the oneworld Alliance, and introduced SABRE in 1959.
Following the merger of AMR Corporation and US Airways Group in 2013, US Airways integrated with American Airlines under a single Air Operators Certificate (AOC). The companies have already been using a single booking system and operating as a single brand since 17-Oct-2015. US Airways Group and US Airways ceased to exist as a separate entity effective 30-Dec-2015. As a result of the merger, all property, rights, privileges, powers and franchises of US Airways became American's, as well as all of US Airways' debts, liabilities and duties.
Location of American Airlines main hub (Dallas/Fort Worth International Airport)
American Airlines Group Inc. share price
6,571 total articles
578 total articles
Hawaiian Airlines’ unique geography continues to benefit the company in 2016 as favourable capacity trends are one factor in its industry outperformance in unit revenue metrics. Hawaiian’s outlook for the remainder of 2016 remains positive as industry capacity on its routes to North America and long haul destinations remains relatively benign.
The airline is acknowledging slight pressure in its inter-island operations due to heightened competition with the smaller operator Island Air. Hawaiian plans to adjust its inter-island schedule later in 2016 to maximise peak flying and cut some off-peak flights.
Hawaiian is expanding service to the Tokyo market in 2016 after being awarded new slots at Haneda airport. But the expansion is not affecting Hawaiian’s overall growth targets of a 2.5% to 5.5% increase in capacity, which is significantly lower than the double-digit expansion it recorded from 2011 to 2013.
Efforts by Spirit Airlines to create some pricing traction in the US domestic market during the early high travel season during 2Q2016 have been foiled, largely by Southwest Airlines. The result was continued weakening of yields for the airline, a metric that has been a mainstay for Spirit during the last couple of years. The airline’s double-digit yield decline slightly worsened from 1Q2016 to 2Q2016.
Spirit is forecasting some improvement in the US revenue environment in 3Q2016 as the airline starts to lap the onset of pricing dilution in the US market that started in mid-2015, and as its own capacity slows in comparison with 2Q2016.
The airline is also making network moves in late 2016 to reflect its new strategy of adding mid-size markets that are less competitive. Spirit is making a push from a new market – Akron-Canton – and is also expanding from Orlando. At the same time, Spirit is exiting markets featuring a mix of low and high levels of competition as it works to change the structure of its network, now that larger airlines are more wilful in matching the ULCC’s fares.
Late in the past century, Airbus and Boeing established competing visions for the future of air travel and shaped their aircraft products accordingly. Airbus envisaged a future of strong hub-to-hub flying that would require its A380. Boeing foresaw the emergence of new long haul city pairs as airlines bypassed hubs to link small/medium cities directly point-to-point with its 787.
Both manufacturers were right – and wrong. Hubs dominate, yet most airlines prefer medium/large aircraft and not the very large aircraft category, consisting of A380s and 747-8s. A380 sales have lagged, raising questions about the aircraft's future, while Boeing is cutting 747-8 production again and has acknowledged that it may need to end production entirely.
Boeing positioned its 787 as a “hub-buster” that would not require passengers to transfer through hubs. Yet 73% of 787 flights are between hubs, among those operated by airlines with more than hub. Hub-to-secondary flights are few, but demonstrate some of Boeing's objectives with the 787: new routes and more frequencies. While hubs dominate, the 787 has given rise to smaller hubs like Denver and Calgary. Partnerships also help explain 787 network deployment: 66% of 787 flights are on routes without a partnership, perhaps indicating airline preference for a lower-risk aircraft.
US airlines Southwest, Alaska and jetBlue are not escaping the stubborn pricing softness in the country’s domestic space which, as it does with the larger network US airlines, continues to pressure their unit revenues – unit revenue being a metric that, logically or illogically, has become a lightning rod for many US airline investors.
Southwest is being hammered after sticking to its planned capacity growth for 2016 and sitting out on some of the fare increases undertaken by other airlines. Its unit revenues have been propped up by a credit card deal reached in 2015, but in 3Q2016 it will post a negative performance in that metric. Alaska is also feeling the effects of macroeconomic trends, but has expressed that its current situation is the result of real difficulty in determining when close-in bookings could improve – given the inherent shorter booking window for those reservations.
Among those three airlines jetBlue posted the largest unit revenue declines for 2Q2016, but in fact it faces tough year-on-year comparisons due to its outperformance in 2015. The overall revenue choppiness continues to cast a pall over the US industry as predictions of when pricing traction will return remain opaque.
The large three global US airlines – American, Delta and United – posted nearly USD3 billion in 2Q2016 profits, excluding special items. But revenue continues to be a challenge, with uncertainty stemming from the UK Brexit vote and general economic sluggishness. Domestically, Delta and United continue to face falling corporate yields, even as volumes remain steady.
All three airlines have further revised their 2016 capacity guidance, which seems to have lifted their stock valuations. However, prices are still off yearly highs, and do not show signs of budging until investors see definitive signs of unit revenue increases. Whether or not the laser focus by investors on unit revenue is justified, the reality is that airline valuations will continue to suffer while the industry’s performance in that metric remains negative.
The rise of ULCCs and other factors have driven permanent changes in pricing dynamics in the US industry, and the Big 3 find themselves in a state of adjusting to the new reality. The result is that fundamental improvement in unit revenues is not likely to begin until 2017 – despite investor preference for a quicker rebound.
Delta Air Lines believes that it will receive approval for its proposed immunised joint venture with Aeromexico in 4Q2016. But opponents of the tie-up – most notably Hawaiian Airlines and jetBlue – are ratcheting up their arguments that without a formal open skies agreement between Mexico and the US antitrust immunity is a non-starter.
jetBlue and the Mexican airlines Interjet and Volaris have also spoken out about the disproportionate number of slots that Aeromexico and Delta will hold at Mexico’s largest airport and gateway – Mexico City Juarez. jetBlue is urging regulators evaluating Aeromexico and Delta’s ATI request to require the divestment of 30 slot pairs at Juarez in order to ensure smaller airlines can compete effectively against the larger airlines dominating the Mexican transborder market.
Given the political uncertainty in the US, it is tough to predict whether the DoT will issue a decision on the joint venture before the Nov-2016 presidential elections. Whatever the outcome Delta will still exert considerable influence over Aeromexico, given its plans to up its stake in Mexico’s largest airline. ATI seems to be a cornerstone of Aeromexico’s transborder strategy, and without the benefits of joint venture Delta will assume the role of a vocal shareholder, rather than a full strategic partner.