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Thursday, March 3, 2011

American Trims 2011 Capacity Guidance

The increased price of oil has prompted American Airlines to cut a full percentage point from its 2011 capacity guidance to stockholders, which just weeks ago stood at 3.6% growth for the year.
This reduction, included in a March 1 presentation by Treasurer and VP-Corporate Development Beverly Goulet, does not specify how this will affect American’s domestic and international growth, which previously expected a 1% rise in available seat miles at home and 7.7% abroad (Aviation Daily, Jan. 20).
A spokesman, however, says that no routes are being cut and that the ASM reduction, for now, comes from reduced frequencies and revised schedules. International flying and the replacement of MD-80s with Boeing 737-800s were the key factors in American’s 2011 capacity plan.
Goulet notes that the changes to capacity growth also “will put some pressure on our unit costs,” although the airline will “continue efforts to find additional savings to maintain flat non-fuel unit cost.” In January, American forecast zero growth in mainline and consolidated unit growth, excluding fuel, but 3.8% and 4.1% rises, respectively, when factoring an average fuel price of $2.67 per gallon.
American’s VP also detailed passenger unit revenue for the first two months of 2011, which grew 4.5-5%, compared with the same period in 2010, on continued yield improvement, as well as “significant” capacity increases from transatlantic competitors and “relatively strong” unit revenue growth. This guidance deducts $50 million in revenue lost due to adverse weather, but, as Goulet notes, still shows “significant industry fare increase activity, which has accelerated recently as fuel prices have increased.”
March’s advance booked load factor is comparable to 2010, continues Goulet.
She also reveals that American in February added a third Boeing 777-300ER to its backlog. The spokesman confirms that this is the conversion of an option that was due to expire, and that the aircraft will be delivered in 2013.

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