American Airlines has taken a step in the right direction.
Based on its first-quarter results announced last month, industry analysts say the Fort Worth-based carrier is improving its cost structure. Wages and benefits dropped 17 percent, evidence that its new cost-saving labor contracts are in effect. And total operating expenses dropped 1.3 percent, even as fuel prices grew slightly in the quarter.
“We don’t yet have all of the savings ground into our numbers from the restructuring. You’ll see more coming on line throughout the year,” American Chief Executive Officer Tom Horton said when the earnings were announced April 18. “But I think we’re very much on track and I think it’s, in our view, a very quick and an effective restructuring of the company.”
Renegotiated airport leases and new fuel-efficient aircraft will come on line throughout the year for American. And it expects to close its merger with US Airways in the third quarter.
Although American’s bankruptcy cost reductions are not as dramatic as at other airlines that slashed expenses in bankruptcy court, analysts say American’s new cost structure will allow it to be competitive with United Continental and Delta Air Lines, particularly as costs rise at those carriers partly because of new pilot labor agreements.
“We’re not seeing the significant difference in labor cost that we’ve seen in past bankruptcies,” said Bill Swelbar, an airline researcher at the Massachusetts Institute of Technology. “But now it’s an industry that will compete less on labor costs going forward and will compete on service.”
Click here to read the full story that ran in Sunday's Star-Telegram.
And below are a few charts that didn't make it into the print edition that show how American's financials stack up against the rest of the industry.
|Airline||Labor costs Q1 2013 (in millions)||Labor costs Q2 2012 (in millions)||% change|
|Airline||CASM Q1 2013 (in cents)||CASM Q1 2012 (in cents)||% change|
|Airline||CASM ex-items Q1 2013 (in cents)||CASM ex-items Q1 2012 (in cents)||% change|
|Airline||PRASM Q1 2013 (in cents)||PRASM Q1 2012 (in cents)||% change|
|SOURCE: the airlines|
|Note: CASM=cost per available seat mile|
|PRASM=passenger revenue per available seat mile|