American Airlines cuts second-half growth plans | Real Time Headlines

U.S. airlines are reducing capacity through year-end to cool economy Domestic market oversupply This has led to lower fares and lower profits despite strong summer travel demand. For passengers, this could mean fares are about to rise.

Deutsche Bank said in a report on Sunday that American Airlines made “one of the largest weekly capacity cuts in the industry” last week, cutting planned fourth-quarter capacity by nearly 1%. Airlines currently expect flight numbers to increase by about 4% annually in the final three months of this year.

Deutsche Bank airlines analyst Michael Linenberg wrote in a report: “Despite the overall sharp cuts, we expect further flight reductions in the coming weeks as airlines are expected to continue to refine their flight schedules. “

U.S. airline executives note strong demand, but a flood of flights in the U.S. domestic market is forcing them to cancel growth plans, which could drive up fares. The latest U.S. inflation report earlier this month showed that air ticket prices fell 5.1% year-on-year in June, down 5.7% from May.

If travel demand continues to grow, reducing capacity could drive up fares for consumers and boost airline profits. Offering fares in the market that are profitable for airlines but acceptable to consumers is critical for the industry because Consumers have retreated Regarding spending in other areas.

Outlook for the third quarter delta and Unity earlier this month disappointed investorsBut their CEO said they expect capacity reductions across the U.S. industry to materialize in August, helping results. Southwest Airlines Unit revenue, a measure of how much revenue an airline brings in from the volume of flights it flies, is forecast to likely fall in the third quarter. The airline said last week it would eventually abandon its iconic open seating model and introducing seats with extra legroom to increase revenue.

American airlines It reported a 46% drop in second-quarter profit on Thursday and said it planned to scale back capacity growth in the coming months, after rising less than 1% in September from a year earlier.

“Excess capacity resulted in a higher level of discount activity in the quarter than we expected,” Chief Executive Robert Isom said on an earnings call last week. Overall, American plans to After growing by about 8% month-on-month, it achieved 3.5% growth in the second half of this year.

Low-cost and discount airlines have been more aggressive in cutting unprofitable routes and reducing capacity. Deutsche Bank said the airlines planned to shrink by 2.2% in the fourth quarter compared with the same period in 2023.

JetBlue Airwaysfor example, there is eliminated This year we eliminated loss-making routes and deployed aircraft to more popular city pairs. The airline is due to report results before the market opens on Tuesday.

spirit airlinesAt the same time, the warning states Losses exceed expectations Second-quarter revenue from non-ticket revenue, which includes fees such as checked baggage and seat assignments, was lower than expected.