American Airlines Group expects Q3 operating margin of 10 to 12 percent
In an investor update Wednesday, American Airlines Group estimated that its operating margin – operating profits as a percentage of operating revenues – to be 10 to 12 percent.
Other factoids from the AAG 8-K and its September traffic report:
– It expects to have 1,540 aircraft in its fleet at year’s end: 975 in mainline American Airlines and US Airways and 565 at its regional partners. That’s up 12 from Dec. 31, 2013: five more mainline jets and seven more regional aircraft.
– It expects to pay $2.95 to $3 per gallon for fuel in the third quarter just ended, and $2.66 to $2.71 in the fourth quarter. By comparison, American Airlines paid $3.03 per gallon in Q3 2013 and $3.04 per gallon for all of 2013. Each cent change represents about $42 million to $43 million in operating expense.
– American expects capacity, in available seat miles, to increase about 2.2 percent for mainline and regional carriers “primarily due to more active aircraft and larger gauge aircraft replacing smaller gauge legacy aircraft.”
– Capacity on mainline American Airlines and US Airways will be up about 2.4 percent – 1 percent on domestic routes and 5 percent on international routes.
– It expects its unit revenues — revenues per available seat mile flown — to be up 0.5 percent to 1.5 percent in the third quarter.
In its traffic release American Airlines reported that its September traffic, combining it and US Airways, was down 0.2 percent from a year earlier, even though capacity was up 1.6 percent. Load factor or percentage of seats filled dropped 1.5 percentage points to 80.0 percent.
The decline was due to falling loads on international flights, particularly across the Atlantic. Company officials, as well as those at other airlines, have noted that supply has exceeded increases in demand on trans-Atlantic routes.
Atlantic loads dropped to 79.6 percent in September, down 8 points from September 2013. Latin America was down 2 points to 77.1 percent and Pacific was down 4.6 points to 73.1 percent.
On the other hand, loads were up 0.3 percentage points on domestic routes, to 82 percent.