American Airlines' corporate revenue continued to show
strength in the second quarter, airline executives said during a Thursday
morning earnings call.
"Managed corporate revenue was up 26 percent over the
prior year, marking our fifth consecutive quarter of double-digit growth,"
said American chief commercial officer Nat Pieper. The segment's revenue grew
13 percent during
the first quarter.
In addition, "revenue performance with small and medium
businesses and [travel management companies] also surged in the quarter,"
Pieper added. SME revenue through the AAdvantage Business portal was up 42
percent year over year, he said, while the TMC revenue was up 19 percent.
Executives tied together corporate demand and premium
demand. Second-quarter premium unit revenue increased more than 13 percent year
over year, "driven by strong leisure and corporate demand across all
entities," with total premium revenue up 19 percent, Pieper said.
American CEO Robert Isom said the competitiveness of the airline's
network is reflected in premium revenue performance, "both from a
corporate perspective and overall premium yields." He added that the
carrier is "especially encouraged by our corporate revenue."
Fuel Volatility Affects Capacity Growth Plans
In a common industry refrain, Q2 fuel prices surged for
American, up $2.2 billion year over year. The carrier expects that expense to
be $6 billion higher for full-year 2026 compared with 2025, Isom said. But the
carrier said it managed to offset about 50 percent of the second-quarter increase.
Still, the second-quarter average fuel cost was $4.05 per
gallon, up 77 percent year over year. The carrier anticipates the average fuel
price for the third quarter to be $3.75 per gallon, based on the forward curve
as of July 21, American CFO Devon May said, "resulting in a [projected] $1.7
billion year-over-year increase in fuel expense in the quarter."
The elevated cost of fuel has caused the carrier to lower
its expected third-quarter capacity growth to 3 percent to 5 percent year over
year, "approximately two points lower at the midpoint than previously
planned," May added.
American Q2 Metrics
American second-quarter passenger revenue was $15.2 billion,
up nearly 16 percent year over year. Total revenue exceeded $16.7 billion, an
increase of more than 16 percent on a capacity increase of 5.4 percent.
Net income for the quarter was $71 million, down from the
$599 million reported a year prior.
American projects third-quarter revenue will increase 16
percent to 19 percent year over year, as "we expect demand to remain
strong and our commercial execution to keep improving through the back half of
the year," Isom said.
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