American Airlines' passenger revenue grew 3.2 percent year over year in the second quarter to $11 billion, and corporate revenue growth kept pace with that rate, executives said on an earnings call.
Corporate revenue "continued to grow" and "further strengthened in the last six weeks of the quarter," president Robert Isom said. In addition, he said, revenue from small and midsize enterprises is showing "significant growth" and revenue from those customers grew by double-digit percentages year over year.
Domestic passenger revenue grew 4 percent, improving across every hub, Isom said. Passenger revenue on international flights declined 1.3 percent.
Although Southwest Airlines extended its removal of Boeing 737 Max aircraft from its schedule through early January, American is sticking to its current schedule, which has them removed through Nov. 2. American's fleet includes 26 Max aircraft, as well as 76 on order, including seven slated for delivery during the second quarter. American expects the related cancellations will cost it $400 million in earnings for the full year.
Besides the Max grounding, American also has been contending with an ongoing contract issue with its mechanics, which also has affected the number of aircraft available for service as the mechanics refuse overtime. Amid the cancellations, American has held the completion factor for its corporate customers steady year over year, said SVP of revenue management Don Casey. He said that indicated that "we've done a good job on figuring out what to cancel."
American's domestic traffic rose 3.5 percent during the quarter and domestic capacity inched up 0.5 percent, pushing load factor up 2.6 percentage points to 88.2 percent. On international routes, traffic increased 2.3 percent, capacity decreased 3.1 percent and load factor rose 4.4 percentage points to 83.8 percent. Yield rose 0.7 percent on domestic routes and decreased 1.8 percent on international routes.
American reported a net income of $662 million during the quarter, up from $556 million in the second quarter of 2018.
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