Strong corporate demand helped propel American Airlines to a fourth-quarter-record revenue of $10.9 billion, up 3.1 percent year over year.
Corporate revenue growth outpaced system revenue growth, American Airlines president Robert Isom said. In particular, American has grown its portfolio of small and midsize enterprise customers, and a "record number" of its small business accounts moved to entry-level corporate contracts during the quarter: 10 times more than made the move a year prior, he said.
SVP of revenue management Don Casey said corporate revenue is up year over year so far in 2019, as well.
Premium Economy cabins also have driven revenue growth, Isom said. The carrier added them to more than 100 aircraft in 2018, and their fares are double the average economy fare. Most passengers in the cabin are buying up from economy rather than buying down from business, he said.
Meanwhile, American's removal of carry-on restrictions from its Basic Economy fares has not increased their popularity. Isom said the upsell rate from those has remained around 60 percent and is a higher premium than the upsell from regular economy was.
Fourth-quarter traffic increased 0.4 percent year over year, and capacity increased 1.4 percent. American's load factor dipped 0.7 percentage points to 81.4 percent, and yield rose 2.4 percent.
Transatlantic traffic rose 6.2 percent amid a 0.8 percent increase in capacity. Transpacific traffic, however, declined 7.5 percent, as the carrier cut transpacific capacity 2.7 percent. Domestic traffic and Latin America traffic were closer to flat in the quarter.
In all, 2018 was a "challenging year," chairman and CEO Doug Parker said, particularly in terms of fuel costs. He added that the carrier was beginning this year "with great momentum and excitement."
For the full year of 2018, fuel costs increased 31.4 percent to more than $8 billion. Net income for the fourth quarter was $319 million, compared with a $583 million loss in the fourth quarter of 2017. For the full year, net income increased 10.2 percent year over year to $1.4 billion.
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