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United States of America
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- Dallas/Fort Worth International Airport
- United States of America
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- Domestic | International
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Trans States Airlines
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)
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631 total articles
United Airlines expects to attain a positive passenger unit revenue performance in 2Q2017, which would mark the first positive result for the airline in that metric since early 2015. The airline’s PRASM results in 1Q2017 were in line with its initial forecast, which was more conservative than those of its larger US rivals. American and Delta refined their 1Q2017 unit revenue forecast downward, while United kept its guidance intact, and its performance fell within its initial estimates.
The airline’s 2Q2017 positive unit revenue outlook is driven by many factors, including a shift in its management of close in bookings to reduce reliance on advance purchase discounts. Latin America and the US domestic market continue to be bright spots for United, while declines in Pacific unit revenue continue to moderate. United’s better than expected unit revenue performance in trans-Atlantic markets in 1Q2017 should moderate as point of sale tilts more toward Europe later in the year.
Markets seem still to be digesting United’s decision to increase its planned 2017 capacity growth by 1.5ppt. United is stressing that much of the growth is driven by increased gauge, and the growth is designed to restore United to its natural share in the US domestic market.
After toying with the idea of engaging in an initial public offering for more than year, the US ULCC Frontier Airlines now intends to go public as its major shareholder, ULCC specialist Indigo Partners, sets its sights on Argentina. Frontier has arrived at and passed many ULCC milestones, including producing unit costs excluding fuel below the USD6 cent benchmark for the ULCC model, placing it on par with its fellow ULCCs Spirit Airlines and Allegiant.
Frontier markets its product differently from other US ULCCs, giving passengers the options to purchase product in a bundled form or a la carte, but it still maintains ultra low fares. However, Frontier couldn’t escape the pricing pressure that permeated the US market in 2016, joining the majority of the country’s airlines in posting distinct yield and unit revenue declines.
Obviously, despite the pricing pressure and changing dynamics in the US market, Frontier remains bullish on the opportunities for ULCCs in the market place, concluding that numerous markets exist for it to operate profitably with low fares.
During the past several years Frontier’s network focus has been somewhat murky. Now Frontier’s network strategy is targeting high fare, underserved routes. And like its rival Spirit, Frontier also singles out medium sized markets that offer some protection from larger competitors.
Brazil’s fourth largest domestic airline, Avianca Brazil, has opted to branch out internationally with new service to Miami and Santiago, Chile, joining formidable competitors in each market that will compete fiercely with a new rival. Avianca Brazil’s competitors have significant strength in each market, with an ability to market vast network connections in conjunction with their partners.
Avianca Brazil’s decision to add international destinations occurs as its domestic growth continues unabated, despite warnings by its Brazilian rivals that overcapacity in the domestic market could threaten a slow recovery of yields that is just starting to take shape.
Avianca Brazil’s branching out into international markets occurs against the backdrop of a potential merger with Avianca Holdings. Each company is majority owned by Synergy Aerospace, but operates separately. After completing the evaluation of a potential merger with Avianca Brazil in 2014, Avianca is now reconsidering a potential tie up with the airline amid an ugly shareholder battle over Avianca’s pursuit of a strategic partnership with United.
The three large US global network airlines – American, Delta and United – continue to tout the strength of their balance sheets; the results which they’ve achieved during the past few years by the use of various tools, including free cash flow generation and debt reduction.
Delta is using its newly minted investment grade status to tap markets for creative ways to fund its hefty pension obligations during the next two to three years. American is also working to ensure pension compensation coverage by lifting its liquidity targets as rules allowing favourable minimum funding contributions expire in 2017.
Each of those airlines is bracing for fairly substantial capital expenditures during 2017, largely driven by aircraft acquisitions, but American, Delta and United have no plans to compromise their balance sheet progress irrationally in order to support fleet revamps.
The Basic Economy trend sweeping the US airline market is fostering speculation about the exact results that American, Delta and United hope to achieve by introducing new tiered pricing structures into the market place. On the surface, the pricing structures are tools for those airlines to compete more effectively with ULCCs in the market. But more strategically, new pricing segmentation provides the large three US global airlines an avenue to execute their revenue management more effectively, preventing pricing dilution of their more higher end offerings.
Even the rivals that American, Delta and United are targeting with their bare bones product offerings believe that ultimately their new pricing schemes could create pricing stability in the US market – which appears on a fragile path to recovery. The logic for that conclusion rests on the ability of the Big 3 for product upsales that drive up pricing for all fares in the market.
One challenge the large US airlines face in the expansion and roll out of their new tiered pricing structures is ensuring the correct product attributes are communicated correctly through distribution channels outside their respective websites. Proper execution is key in order for American, Delta and United to realise the billions in potential revenue that they believe exists from the overhaul of their pricing structures.
It is surely no coincidence that Delta Air Lines and Korean Air announce their joint venture a mere two days after their SkyTeam partner China Southern Airlines – the largest in Asia, second largest in SkyTeam and sixth largest in the world – agrees to an investment and broad strategic partnership from Delta's rival, American Airlines, a member of oneworld.
Delta and Korean Air have long flagged their JV and the 29-Mar-2017 announcement is only a Memorandum of Understanding. The JV will have to be strong, with a high level of integration and trust, since it will involve profit sharing and not just revenue sharing.
Yet aside from that Delta and Korean have offered no new details, or even a time frame. Their announcement merely formalises what they have essentially been saying for months.
If it is to be leverage against China Southern-American, it should be noted that the two partnerships will be very different in the medium term and will not create significant competition with each other. The Delta-Korean JV comes with unfortunate timing for Korean Air, which continues to face slackening investor confidence and severe pressure in the Korea-China market.