Any positive financial airline news should be warmly greeted by frequent fliers since mergers and less competition often negatively impact the availability of cheap airplane tickets and cheap vacation packages.
The good news for American Airlines is that it is forecasting its third quarter revenue per mile to increase between 8 to 9 percent vs. a year earlier, even with a loss of $25 million because of 1,200 flights being cancelled as a result of Hurricane Irene. Unfortunately, American noted that higher fuel prices are also pushing up its costs in the third quarter.
American said that its cost per mile is expected to rise between 9 to 10 percent in the first quarter, largely as a result of higher fuel prices, though other costs are increasing as well.
American acknowledged that it may take a big write down in the fourth quarter to account for the decreasing value of its older planes. American is in the process of replacing some of its most fuel inefficient planes. It recently announced plans to purchase 460 planes over the next several years.
American has fallen from the worlds biggest airline in 2008 to number 3 in the U.S. as competitors grew through mergers, first Delta and Northwest, followed by United and Continental.
American has taken a number of steps to improve its long term financial health. It has increased its revenue by charging higher ticket prices and introducing new fees, such as charging more for preferred window and aisle seats.
It is planning to sell more international tickets through partnerships with British Airways and Japan Airlines. American Eagle, Americans regional affiliate, is being spun off to save American money. New planes on order from Boeing and Airbus will reduce fuel and maintenance costs.
American was the only major US airline to lose money in 2010 and the only one projected to lose money again this year.
www.cheapfares.com