American Airlines Group (AAL) is the holding company for American Airlines and US Airways. Together with American Eagle and US Airways Express, the airlines operate an average of nearly 6,700 flights per day to 339 destinations in 54 countries from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.
American’s Advantage and US Airways Dividend Miles programs allow members to earn and redeem miles for travel and every day purchases as well as flight upgrades, vacation packages, car rentals, hotel stays and other retail products. A founding member of the one world alliance, American Airlines and its members and members-elect, serve 981 destinations with 14,244 daily flights to 151 countries.
American Airlines Group’s stock has gone up by 8% this week after the airline carrier reported an increase in May traffic and capacity.
Total revenue passenger miles, or traffic, grew 0.5% year over year, while capacity, or available seat miles, increased 1.7%.
Domestic traffic rose 1.4% on 1.2% capacity growth, while international traffic fell 1.4% on a 0.5% increase in capacity.
Total passenger load factor fell 0.9 percentage points to 81.9%.
American Airlines Group’s first quarter 2016 pre-tax margin excluding special items was 12.9 percent, a record for the Company’s first quarter.
As a result of the reversal of the valuation allowance on the Company’s deferred tax assets at December 31, 2015, the Company’s 2016 results include a provision for income taxes at an effective rate of approximately 38 percent, which is substantially all non-cash due to net operating loss utilization. There was no tax provision for federal income taxes recorded in 2015.
Net profit excluding special items was $765 million, or $1.25 per diluted share. This compares to a net profit excluding special items for the 2015 first quarter of $1.2 billion, or $1.73 per diluted share. The 2016 first quarter net profit excluding special items included a provision for income taxes of $456 million, of which $453 million was non-cash.
The Fort Worth-based company continues to anticipate a 6% to 8% decline in consolidated passenger revenue per available seat mile for the 2016 second quarter.
Pre-tax margin is expected to be between 14% and 16%, excluding special items, for the second quarter.
“We are pleased to report a first quarter pre-tax profit of $1.2 billion, excluding special items, and a 15 percent improvement in adjusted earnings per share,” said Doug Parker, American Airlines Chairman and CEO. “These results include a $73 million accrual related to the system-wide profit sharing plan we announced earlier this quarter. The people of American are doing an outstanding job of taking care of our customers and are the key to our future success.”
First quarter 2016 revenue was negatively impacted by competitive capacity growth, continued macro economic softness in Latin America, and foreign currency weakness. Total revenue in the first quarter was $9.4 billion, a decrease of 4.0 percent versus the first quarter 2015 on a 3.6 percent increase in total available seat miles (ASMs). Consolidated passenger revenue per ASM (PRASM) was 12.43 cents, down 7.5 percent versus the first quarter 2015. Consolidated passenger yield was 15.62 cents, down 7.1 percent year-over-year.
The company manages a notable return on equity and good cash flow from operations, which offsets unimpressive growth in net income, generally higher debt management risk and disappointing stock performance.