American Airlines has added 16,000 small and midsize
corporate accounts since the beginning of the year, growing the segment by 50
percent, SVP of revenue management Don Casey said during the carrier's
third-quarter earnings call.
The quarter was the third in a row during which the carrier's
corporate market share improved, and the average ticket value for corporate
customers also rose year over year, Casey said. The carrier additionally has
renewed a focus on group sales, which is "seeing good progress," president
Robert Isom said.
American has
invested heavily in its sales team this year and will have 130 new members
out in the field by next year, he said.
Corporate accounts helped American obtain positive unit
revenue growth on highly competitive transatlantic routes during the quarter,
Isom said. Passenger revenue per available seat mile on the routes rose 2.5
percent year over year, largely due to premium class pricing and "improved
share performance with travel management companies," he said. Unit revenue
on routes to the U.K. were particularly strong. "However, the overall
environment remains challenged, as low-cost carriers grow substantially,
resulting in a weaker pricing environment for coach travel," Isom said.
Mainline passenger revenue increased 2.8 percent year over
year in the third quarter to $7.6 billion. Unit revenue was nearly flat on domestic
routes, due in part to the impact of Hurricane Irma on American's Miami hub. On
Latin America routes, unit revenue was "very strong," but it declined
on Asia/Pacific routes due to softness in China and Korea, Isom said.
Cabin segmentation also contributed to overall unit revenue
growth, he said. Basic Economy fares, which were designed to compete with
low-cost carriers, have spread throughout the continental U.S. Now, about half
of travelers opt to buy up to standard economy when offered a Basic Economy fare,
according to the carrier.
Premium Economy cabins, now installed on 27 of American's
widebody aircraft, generated a $400 average premium over standard economy
fares, and American expects to have those on 63 aircraft by the end of this
year and more than 100 total by the end of 2018, Isom said. The majority of the
demand for that cabin, however, is coming from the leisure side.
Systemwide traffic for American rose 0.9 percent year over
year during the quarter as capacity increased 1.6 percent, resulting in a 0.5-percentage-point
decline in load factor to 82.8 percent. Yield rose 1.6 percent.
American reported a net income of $624 million for the
quarter, down from $737 million in the third quarter of 2016. Operating
expenses rose 5.3 percent year over year, including a 12.7 percent increase in
the cost of fuel and related taxes.
RELATED: American Airlines Q2 coverage
NAACP Travel Advisory
During the earnings call, chairman and CEO Doug Parker addressed
the travel advisory warning the NAACP put out this week. It cited a
"pattern of disturbing incidents" in which American Airlines removed passengers
of color from flights or downgraded them to lower classes of service and suggested
"a corporate culture of racial insensitivity and possible racial
bias." Parker said American has reached out to the NAACP and expects to
work with the organization "in the very near term."
He
said: "We're proud of our commitment to equality and diversity and the
significant impact we make in that regard around the globe, but discrimination,
exclusion and unconscious biases are enormous problems that no one has mastered.
We would never suggest that we have it all figured out. We want to keep
learning, and we want to get even better."