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January 28, 2014

What we learned from the American earnings call

A lot of little tidbits came out of the American Airlines fourth quarter earnings call as chief executive Doug Parker and president Scott Kirby took questions from Wall Street analysts.

Here's what we learned

-American expects capacity to be up 3.5 percent for the year as it replaces older aircraft with newer planes and by reallocating planes on longer routes. The company will be rebanking its hub airports, starting with Miami this year while its main hub at Dallas/Fort Worth airport will be rebanked in the spring of 2015. The concept of a banked hub means an airline has all of its flights arrive at a hub like DFW in a narrow time frame and then have passengers connect on to their flights which depart in another narrow time frame.

-International capacity will be up 9 percent, partly due to American’s new DFW flights to Shanghai and Hong Kong which are scheduled to begin in June. Kirby said the company has received all of the necessary government approvals for the Chinese flights and is pleased with the slot times they were given.

-American also plans to add more seats to its aircraft. Kirby said the airline will be increasing its MD-80s to 140 seats, up from 135. Its Boeing 737-800s will increase to 160 or 164 seats, up from 150 while the Boeing 777-200 will jump to 260 or 289 seats, up from 247 it currently has today. Kirby said some of the new seats installed will be "slim-line seats" which feature a thinner seat design so airlines can fit more rows into an aircraft and maintaining the same amount of legroom between rows.

-The company continues to integrate the two airlines and hopes to add codesharing to all of the flights in each network by the end of February. In the first two weeks of codesharing on some hub flights which began on January 7, American booked 70,000 codeshare tickets, Kirby said.

-The airlines' unions continue to make progress on deciding how to merge workgroups, Kirby said. However, the company expects single seniority lists for pilots and flight attendants to not be ready until early 2015.

-American expects to pay an average of $3.07 and $3.12 per gallon of jet fuel in the first quarter. While the carrier has fuel hedging contracts in place through 2015, American will no longer hedge fuel prices, continuing US Airway’s policy of not placing hedges on jet fuel.

-The carrier continues to work with the government to divest slots and gates as part of its settlement of the antitrust suit filed by the U.S. Department of Justice. The auction process is proceeding on the slots at Washington Reagan airport but has not begun for its two gates at Dallas Love Field. "If we had a choice we’d get to keep them and we’d fly out of Love Field," Kirby said.

-Investors really liked American's earnings report on Tuesday as shares of American [ticker: AAL] were up 4.5 percent, trading around $31.50 a share at 12:30 p.m. CDT. Since the beginning of the year, American’s stock price is up almost 25 percent.

-Andrea Ahles





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Sid Medford

Re-banking the flights? So I guess we can look for the delays to come back as they schedule more flights to land in an hour than the runways can take, and more departures in an hour than the runways can take. Remeber when…..?

Sam Degans

De-banking will require more gate agents...driving up costs.

j klaassen

How much is AA making off of the auctioning of all the slots they are giving up because of the merger??? I bet that doesn't come out in the media!

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