America Airlines says business travel is about 80% recovered


American Airlines’ total business travel demand is about 80% recovered compared with 2019 levels, with small and midsize business revenue approaching a full recovery, CEO Robert Isom said Thursday during a first-quarter earnings call.

Revenue from large corporate clients is about 50% recovered.

“Corporate bookings are at the highest they’ve been since the onset of the pandemic, and we expect that to continue as more companies reopen their offices,” Isom said. “We anticipate overall business revenue to be 90% recovered in Q2.”

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Long-haul international travel was about 50% recovered for the quarter and 60% recovered for March, Isom added.

The company anticipates business travel along with international demand to continue to return and, despite expected continued elevated fuel prices, expects to be profitable in the second quarter based on current demand trends and fuel-price forecasts.

American also is seeing a shift in what it calls “blended” travel — the combination of a business trip with leisure. Historically, they have been about 20% to 25% of trips, but for the past five to six months about 50% to 55% of trips have been blended, American chief commercial officer Vasu Raja said.

“Those blended trips in the system are coming in at yields that are at 75% to 85% of what were true business-only trips, but they are coming through lower cost-of-sale channels and off of negotiated discounts, so the net yields of them are very often the best things in the system.”

American sets monthly sales record in March
The carrier reported $8.9 billion in first-quarter revenue, representing an 84% recovery compared with the first quarter of 2019. Of that figure, $7.8 billion was passenger revenue.

American’s March sales set a monthly record, and it was the first month since the pandemic started that total revenue was above 2019 levels for the same period, according to the airline. Still, the carrier reported a net loss of $1.6 billion for the quarter.

Based on current demand assumptions, American expects total revenue to be 6% to 8% higher versus Q2 2019 on 6% to 8% lower capacity, American CFO Derek Kerr said. “That would be the first time we had produced total revenue greater than 2019 since the start of the pandemic,” he said. “If we hit the midpoint of this revenue guide, the results would be the highest quarterly revenue in the company’s history.”

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Total capacity for the first quarter was down 10.7% compared to Q1 2019. Domestic capacity was down 7.5% and international capacity was down 17.4%.

American expects full-year capacity to be 92% to 94% of 2019 levels, which is a reduction in its full-year outlook from prior guidance largely due to 787 delivery delays, Kerr said.

Regional departures scheduled for the second quarter are down about 20% compared with 2019, while mainline departures are down about 5%, Kerr said.

When asked about the ability to handle the summer demand, Isom noted that the company has hired more than 600 pilots and about 20,000 new employees, but the net number is about 12,000.

“We are sizing the airline for the pilots we have … and those new team members are working in reservations, at airports, throughout the system, so we will be able to handle summer,” Isom said.

Courtesy of Travel Weekly