American Airlines joins rival Delta in upbeat forecast of higher ASM growth in 2018 as 4Q RASM rises
American is joining rivals Southwest and Delta in offering an upbeat assessment of the US operating environment for 4Q2017 as some of the pricing pressure the country’s airlines felt in the third quarter appears to be easing. American’s forecast is driven by improving pricing patterns and its own set of revenue initiatives including the roll-out of segmented fares that feature its basic economy option.
The airline has concluded pricing began to rebound strongly in Sep-2017, and American believes the positioning of basic economy in the market place is driving the revenue momentum it expects to achieve in the final quarter of 2017.
But just as pricing pressure shows some signs of abating, American and Delta are planning robust increases in 2018 capacity. The growth obviously raises questions about industry pricing, but American remains bullish that its unit revenue growth in 2018 will outpace unit cost inflation. Some of Delta’s increase stems from the airline’s decision to resume international growth as those entities show signs of strength.
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