American
Airlines executives during a Tuesday conference call acknowledged the carrier
has lost ground in the corporate market but cited the strength of its network,
bolstered by the US Airways acquisition, as a key ingredient in winning back
its fair share.
"It
is right that over the last few years American did lose corporate share,"
said president Scott Kirby. "I think we will win our natural share back by
virtue of the network we now have. Corporate demand has been and continues to
be strong for us. We feel good about the outlook. I think you'll see us improve
even beyond where we have been historically in corporate."
Kirby
noted that for the fourth quarter, American and US Airways combined generated a
7 percent year over year increase in corporate revenue, and "we are
starting off 2014 strong."
The
new American Airlines Group Inc. posted a fourth-quarter net loss of $1.9
billion when combining results from pre-existing AA and new subsidiary US
Airways Group. After various adjustments related to the merger, AA's
now-complete bankruptcy and many other items, quarterly net income was $436
million, an improvement from the $42 million loss reported for the prior-year
period. For the full year, the combined entity generated $35.5 billion in total
passenger revenue, up 4.7 percent from combined 2012 results and good for tops
in the industry.
"It's
really early in the merger but we are off to a great start," said CEO Doug
Parker. "We have a lot of work ahead."
That
work includes completing systemwide AA-US Airways code sharing (expected by the
end of February), bringing US Airways onto AA's Sabre-furnished reservations system and obtaining from the U.S. Federal Aviation Administration a single
operating certificate (expected in late 2015).
Meanwhile,
after raking in about $2 billion in ancillary revenue during 2013 (including
about $1 billion in bag fees alone), AA has its eye on more. "We will
announce some of that soon but are waiting for the technology to support
it," Kirby said. "There will be some new initiatives. A lot of it is
the seating product, first-class seating, [expedited airport process] Priority
Access and really making those more broadly available. Introducing [AA's premium-economy
product] on the US Airways network, which we don't have today." He said the
carrier expects some of those initiatives to be ready in the next few months,
while others will take longer.
AA
also is planning several network initiatives that it expects will add a
combined $400 million in annual earnings improvement once fully implemented. According
to Kirby, they include reworking schedules at the carrier's Miami hub this
fall, followed by schedule adjustments in Chicago and Dallas in 2015, the
introduction of "variable scheduling" across the network and
"increasing density on a number of aircraft."
Overall,
AA expects 2014 systemwide capacity to be up about 3.5 percent year over year,
including 1 percent growth in the domestic U.S. market and a 9 percent increase
on international routes.
The
airline also is working to collocate pre-existing AA and US Airways airport
facilities, with 17 airports already completed and another 28 expected this
quarter.
When
asked about the possibility of deepening American's relationship with Alaska
Airlines—something Alaska executives hinted at last week—Kirby said, "Of
course we are talking to them about the partnership and making it better,
particularly on the West Coast."