American Airlines' network tweaks officially begin as early revenue trends look favourable

Management at the "new" American remains bullish in the early days after the creation of the new entity following the merger of US Airways and American Airlines. Solid revenue trends for 4Q2013 and FY2013 are reported underneath a lot of merger related noise baked into its combined financial results.

Now that all the regulatory hurdles have been cleared, work is well underway at American in numerous areas including network changes entailing a rebanking of the Miami hub slated for late 2014 followed by similar moves in Dallas/Fort Worth and Chicago O'Hare. The carrier also somewhat surprisingly expects to be profitable at its Los Angeles hub in 2014 now that the combining of US Airways and American has resulted in the merged carrier narrowly becoming the largest airline in the historically fragmented market.

With the merger producing a strong cash balance in excess of USD10 billion for the new American, investors are already pressing management over potential shareholder returns and the proper cash levels the company should carry going forward. Investor curiosity over rewards and cash management could be an indication that the investment community is closely watching both the merger execution and whether promised synergies of more than USD1 billion are delivered on time. American already expects an additional USD400 million in revenue benefits from some network changes occurring in 2014 and beyond.