American Airlines' sets lofty financial targets as it works to change Wall Street's short term view

Management at American Airlines has relentlessly stressed that the US airline industry has gone through a fundamental structural change, and the historical boom and bust cycles of the past should no longer be applied to the future. But recently, markets have been spooked by creeping capacity and the ensuing revenue pressure that has created.

American’s own planned system capacity growth of 1.4% for 2017 is reasonable expansion, yet its valuation has been pressured by overall industry growth and, in part, by its decision to institute mid-contract pay increases for employees.

Despite this pressure, American remains bullish about its financial performance in the future. The company’s executives have boldly declared American may never lose money again, an assertion driven by estimates of posting USD2.9 billion in incremental revenue during the next four years.

Both American and rival United have outlined ambitious financial targets, with American focusing on consistent pretax profits and United aiming to close margin gaps with Delta. But as United has discovered during 2017, declaring lofty ambitions can have a downside.

This CAPA Premium Analysis article is 1,424 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com