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American Airlines’ September Traffic Declines; Stock Down


Premier passenger carrier, American Airlines Group Inc. AAL posted a decline in traffic in the month of September. Traffic – measured in revenue passenger miles (RPMs) – was 17.8 billion, down 1.7% from 18.07 billion recorded last September.

On a year-over-year basis, consolidated capacity (available seat miles/ASMs) too declined 0.4% to 21.76 billion. Moreover, load factor or percentage of seats filled by passengers decreased to 81.6% from 82.7% in Sep 2015 due to greater reduction in traffic compared with the capacity contraction..

On account of the lackluster performance in September, the company’s stock closed 1.77% lower in the last trading session.

In the first nine months of 2016, American Airlines recorded 0.7% growth in RPMs to 170.02 billion, while ASMs inched up 2.2% to 207.72 billion, both on a year-over-year basis. Also, the load factor declined 120 basis points year over year to 81.9%. Total passenger count (Enplanements) in September decreased 2.2% and decreased 0.6% in the first nine months of 2016.


American Airlines, sporting a Zacks Rank #5 (Strong Sell), expects total passenger revenue per ASM for the third quarter of 2016 to decline by almost 2–3% year over year. (PLS MENTION THE PREVIOUS GUIDANCE). You can see the complete list of today’s Zacks #1 Rank stocks here. The company also expects pre-tax margin of 13% to 15% for the third quarter. Cost per ASM is expected to increase by 5–7% for 2016, while mainline fuel expenses are forecast between $1.44 per gallon and $1.49 per gallon in the third quarter.

The company also disclosed that it has purchased 18.2 million shares worth $616 million in the third quarter. Moreover, American Airlines reached a tentative agreement with its flight crew training instructors and simulator instructors. Represented by the Transport Workers Union (TWU), the instructors are an integral part of the airline.

American Airlines continues to face increasing competition from peers such as United Continental Holdings Inc. UAL, Southwest Airlines Co. LUV and Delta Air Lines Inc. DAL. American Airlines is scheduled to report third-quarter operating results on Oct 20 this year.

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