Boeing Delays Add To American Capacity Cuts

Jan 21, 2009
Adrian Schofield adrian_schofield@aviationweek.com



American reported a $340-million net loss for the fourth quarter, and the carrier said it will further cut its capacity for this year, thanks partly to Boeing delivery delays.

Despite recent oil price drops, American's fuel costs were still higher year-on-year. This offset significant unit revenue gains. Unfavorable fuel hedge positions mean American will not see the full benefits of lower spot fuel prices this year. However, CEO Gerard Arpey said he is "guardedly optimistic we can regain momentum in 2009."

On the fleet front, Boeing has given American a revised delivery schedule for the 76 737-800s the airline has on order to replace MD-80s. American is now slated to receive 29 737s this year, versus the 36 it was previously expected to take, and 39 in 2010, one less than previously forecast.

Deliveries will begin in the current quarter, and the remaining eight will arrive early in 2011.

American said it will not use MD-80s to backfill the capacity lost due to the lower delivery rate this year. This means it can cut its mainline capacity guidance for this year by another percentage point.

Full-year mainline capacity will now be down more than 6.5% year-on-year, with domestic dropping 9% and international declining 2.5%. Regional flying will be down 8%.

Excluding special items, the fourth-quarter loss was $214 million. Mainline unit revenue, excluding special items, rose 5.5% in the quarter compared to the previous year, and yield rose 8.1%. However, revenue fell 3.1% to $5.5 billion due to lower capacity and traffic. Fourth-quarter mainline capacity dropped 8.3%, and loads fell 1.9 points to 78.3%. Fuel costs were up by $133 million.

The full-year net loss was $2.1 billion, and $1.2 billion excluding special items. Full-year fuel costs rose by $2.7 billion

Photo credit: American Airlines