Corporate air travel demand hit a "rough patch" in
February and March but has since strengthened, American Airlines executives
said on a first-quarter earnings call.
American president Scott Kirby said corporate demand
weakened during the stock market dip earlier this year. "Whether it should
or not, that does affect travel demand, particularly corporate travel
demand," he said. "It's easy, when you start to get worried, to rein
in your travel and entertainment budget."
As the stock market has improved since then, close-in demand
has begun to pick up, as well, Kirby said.
American's total operating revenue dropped 4 percent year
over year to $9.4 billion during the quarter, including a 6.1 percent drop in
mainline passenger revenue. Kirby said a decision to suspend discount Advantage
Fares for three months also hurt revenue.
Advantage Fares came to American via its merger with US
Airways, which deeply discounted routes with connections in order to compete
with nonstop flights. The U.S. Department of Justice worried in its challenge
to the merger in 2013 that American would remove the fares, and the carrier
hadn't until last quarter. It since has brought them back. "We were
starting to wonder whether our decision to cancel Advantage Fares was the
correct revenue decision, but before we made a final decision on that, one of
our competitors presumably concluded that it was also the wrong decision and
put them back," Kirby said. "So they've been back on the market now
for a couple of weeks."
Executives also cited currency challenges, capacity growth
among competitors and Latin America's economic weakness as factors in the
revenue decline.
American's traffic increased 3.2 percent year
over year during the first quarter, and American grew capacity 3.6 percent. The
carrier's load factor dropped 0.3 percentage points to 79.6 percent, and yield
declined 7.1 percent. American reported net income of $700 million for the
quarter, down from $932 million in the first quarter of 2015.