Despite lower revenue, American Airlines saw "sizable
increases" in corporate volume year over year during the fourth quarter,
and the carrier projects that the growth will continue this year, executives
said during an earnings call.
"Corporate demand seems strong and from our perspective
has been all along," president Scott Kirby said. "Like all customers,
corporate customers are benefitting from low fares, so my guess is that volume
will remain strong and we will see fares and yield recover as we move through
the quarters."
Mainline passenger revenue declined 6.9 percent year over
year to $6.7 billion, and total operating revenue was down 5.2 percent to $9.6
billion. The carrier was hit both by large capacity growth in domestic markets and
weaker currencies on international routes, CFO Derek Kerr said. Even so,
American's second-strongest revenue performance came in Dallas—second only to
former US Airways hub Charlotte, N.C.—where competitors like Southwest Airlines
have significantly boosted capacity, Kirby said.
On a broader scale, American "has been aggressively
discounting fares as it competes with the ultra-low-cost and low-cost
carriers," which contributed to the revenue decline, according to a
research note by Cowen and Co.
American's consolidated traffic increased 3.8 percent year
over year during the quarter while capacity increased only 0.6 percent. Load
factor increased 2.6 percentage points to 82.7 percent.
Throughout 2016, American expects to add 55 mainline
aircraft and 49 regional aircraft while removing 92 mainline aircraft and 29
regional aircraft. Last year, the carrier spent more than $5.3 billion on new
aircraft, adding 75 mainline and 52 regional aircraft while removing 112
mainline and 31 regional aircraft.
Net income for the quarter was $3.3 billion, compared with
$597 million in the fourth quarter of 2014. The quarterly income included a net
benefit of about $2 billion in special credits related to a reversal of its tax
valuation allowance.
Full-year net income reached $7.6 billion,
nearly three times the carrier's net income in 2014. Despite lower revenue and
yield, American also benefited more from lower fuel costs than many of its
competitors did because it had no fuel hedges in place in 2015, according to
Cowen and Co.