American Airlines has taken an $80 million hit from the
grounding of Boeing 737 Max aircraft, and it expects that the overall impact
will be $350 million before the aircraft is able to resume service.
The carrier has
extended cancellations of flights using the aircraft through Aug. 19, about
115 of 7,000 daily departures over the summer. Thus, it has had to reaccommodate
nearly 700,000 passengers, president Robert Isom said. While American's 24 Max
8 aircraft are a "small portion of the total fleet, the financial impact
is disproportionate" because it represents a loss of revenue while costs
remain, CFO Derek Kerr said. The $350 million hit to pretax income assumes the
aircraft are able to reenter service after Aug. 19.
Even with the Max-related cancellations, passenger revenue
rose 1.9 percent year over year to $9.7 billion during the quarter, and total
operating revenue increased 1.8 percent to $10.6 billion, a record for the
first quarter, Kerr said. The quarter also marked a record in terms of
corporate account acquisitions, and corporate revenue growth outpaced total
revenue growth thanks to strong demand and higher fares, Isom said.
A recent survey of American's corporate customers showed 90
percent plan to either maintain or increase travel spending levels in 2019, "so
we feel confident about corporate demand for the remainder of the year,"
Isom said.
Total traffic rose 3.5 percent year over year during the
quarter as capacity increased 1.3 percent, pushing load factor up 1.8
percentage points to 82.2 percent. Yield declined 1.6 percent year over year.
American reported net income of $185 million for the first
quarter, up from $159 million in the first quarter of 2018.
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