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American Airlines’ financial performance is clouded by concerns over unit revenue degradation


American Airlines does not foresee a return to unit revenue growth until 2H2016 as industry capacity increases that occurred during 2Q2015 should remain at similar levels until that time. American’s 7% decline in passenger unit revenues during 2Q2015 was the largest among the four major US airlines.

Similar to those other airlines, American posted record top-line financial results in 2Q2015, which for now does not seem to be enough to allay investor concerns about declining unit revenue.

Perhaps the reason investors have lingering concerns over declining unit revenues is that US airlines are still in the midst of proving that their financial performance is moving closer to sustained investment grade. Investors at this point have no frame of reference to feel assured that airlines can successfully weather current revenue dynamics.

Southwest Airlines has a more upbeat view on the domestic market than its US rivals


CAPA Australia Pacific Aviation Summit in Sydney - the region's biggest ever aviation & travel forum


Singapore Airlines reports higher profits but future outlook hinges on Scoot & Tigerair improvements


Alaska Air Group maintains Seattle market share while hinting at reduced 2016 capacity growth


Ryanair's customer refocus delivers 1Q load factor and 25% profit rises; Germany the next big target


Aer Lingus' FY2016 outlook strong as IAG's bid nears acceptance; new era to begin for the Irish flag


Understanding the Asia Pacific growth opportunities: Tony Fernandes explains the market

No-one doubts that Asia will become the dominant world aviation market over coming decades. North America and its airlines will necessarily be major beneficiaries of that expansion. For the time being however, the US-China market is only one third the size of US-UK’s and much lower yielding; Asia’s two biggest markets, China and Japan combined are still smaller than the UK market. But China-US capacity will double in the two years to Jul-2017, a trajectory that is likely to continue.
Meanwhile the nature of the Asian aviation markets has evolved greatly over the period of a decade. In Southeast Asia, nearly two thirds of all airline seats are on low-cost airlines, none of which existed a decade ago, implying a highly price sensitive underlying market.

In North Asia, this low-cost, price sensitive phenomenon is starting to take hold as well, albeit from a much lower market share. But it is growing fast, with many new entrants.

To understand fully how these forces will influence Asian consumer demand, we hear from Malaysia based Tony Fernandes, the man who sparked the LCC revolution in Asia and whose airline, AirAsia, has now carried 50 million passengers. In doing so, he has effectively deregulated international aviation across much of Asia.
The remarkable airline, with 9 operating entities, including cross border joint ventures in various countries, also includes three long-haul low-cost operators.

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