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American Airlines (AAL) Hurt by August Load Factor Decline
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Shares of Fort Worth, TX-based American Airlines Group (AAL - Free Report) declined significantly following its dismal August report on Sep 12. However, the stock recovered to close the trading session at $38.34, down only 0.39% from the previous day’s closing price.
Traffic measured in revenue passenger miles (RPMs) dipped 2.8% on a year-over-year basis to 20.4 billion. The downside was attributable to lackluster performances both on the international as well as domestic front.
Consolidated capacity (available seat miles/ASMs) inched up 1.4% to 24.7 billion in the month. However, load factor or the percentage of seats filled by passengers decreased to 82.9% from 86.5% in Aug 2015. This was primarily because capacity expanded but traffic contracted, leading to empty planes.
American Airlines is not the only carrier to report a decline in August load factor. Other carriers like United Continental Holdings (UAL - Free Report) and Southwest Airlines (LUV - Free Report) too reported declining load factors for August.
In the first eight months of 2016, American Airlines recorded 1% growth in RPMs to 152.3 billion, while ASMs climbed 2.5% to 186 billion, both on a year-over-year basis. Also, load factor declined 120 basis points year over year to 81.9%. Moreover, total passenger count (Enplanements) slipped 0.5% to 135.1 billion for the same period.
American Airlines still expects its PRASM (passenger revenue per available seat mile: a key measure of unit revenue) to decline in the band of 3–5% for the third quarter of 2016. The company continues to expect a pre-tax margin of 12–14% for the third quarter.
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American Airlines (AAL) Hurt by August Load Factor Decline
Shares of Fort Worth, TX-based American Airlines Group (AAL - Free Report) declined significantly following its dismal August report on Sep 12. However, the stock recovered to close the trading session at $38.34, down only 0.39% from the previous day’s closing price.
Traffic measured in revenue passenger miles (RPMs) dipped 2.8% on a year-over-year basis to 20.4 billion. The downside was attributable to lackluster performances both on the international as well as domestic front.
Consolidated capacity (available seat miles/ASMs) inched up 1.4% to 24.7 billion in the month. However, load factor or the percentage of seats filled by passengers decreased to 82.9% from 86.5% in Aug 2015. This was primarily because capacity expanded but traffic contracted, leading to empty planes.
American Airlines is not the only carrier to report a decline in August load factor. Other carriers like United Continental Holdings (UAL - Free Report) and Southwest Airlines (LUV - Free Report) too reported declining load factors for August.
In the first eight months of 2016, American Airlines recorded 1% growth in RPMs to 152.3 billion, while ASMs climbed 2.5% to 186 billion, both on a year-over-year basis. Also, load factor declined 120 basis points year over year to 81.9%. Moreover, total passenger count (Enplanements) slipped 0.5% to 135.1 billion for the same period.
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American Airlines still expects its PRASM (passenger revenue per available seat mile: a key measure of unit revenue) to decline in the band of 3–5% for the third quarter of 2016. The company continues to expect a pre-tax margin of 12–14% for the third quarter.
Zacks Rank and a Key Pick
American Airlines carries a Zacks Rank #3 (Hold). A better-ranked stock in the airline space is Copa Holdings SA (CPA - Free Report) , which sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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