Very few businesses
can discount the kind of loss that American Airlines just took and still be
positive about the rest of the year.
American executives
say they are still optimistic they can reach their yearly goals despite a $312
million loss in the first quarter.
“We remain on track to
deliver our full year earnings per share guidance,” said American Airlines
chief executive officer Bob Isom. “We don’t like reporting a loss; that’s a
challenge for us. But it’s also an opportunity. As we look forward, we are
encouraged by what we see as industry dynamics, and also by those things we
have identified in the first quarter that we can go and address. We are going
to do that and we are going to stick to our longer-term game plan.”
The net loss was $226
million before one-off items.
That compares to a $10 million
profit by American in the same quarter last year. American set a record with
more than $12 billion in revenue in the first three months of this year.
“The American Airlines team continues to build a reliable,
efficient and resilient airline,” said Isom.
“While we aren’t satisfied with our first-quarter financial
results, we have a strong foundation in place, and we remain on track to deliver
our full-year financial targets. Our team is running a fantastic operation,
driving revenue through our commercial initiatives, efficiently managing costs,
and producing free cash flow to further strengthen our balance sheet.”
American generated operating cash flow of $2.2 billion and free
cash flow of $1.4 billion in the first quarter.
American chief commercial officer Vasu Raja points to a couple of reasons as to why the carrier is so
optimistic for the rest of the year.
“Competitive capacity grew the most in our market strengths, in
the domestic and short-haul network,” he said. “We
see industry capacity starting to change as we go into the summer, and
certainly into the fall. That reduction is coming most heavily in the
narrowbody system, which uniquely favors us. … About 60% of our growth (available
seat miles) were in off-peak times of the day, or days of the week. As we go in
the third quarter, we are taking a much more careful look at our off-peak
flights. So we will produce less flying in the troughs.”
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