Written by StockNews.com
American Airlines Group Inc. (Nasdaq: AAL) disclosed in a regulatory filing with the SEC that it now expects lower results in a key revenue metric for the first quarter, citing fewer canceled flights that lead to less densely packed airplanes.
The company cut its Q1 2017 total revenue per available seat mile (TRASM) outlook to up 1.5% to 3.5% year-over-year, versus its earlier forecast of up 2.5% to 4.5%. AAL made the move amid a stronger year-to-date mainline completion factor of 98.9%, which was up from 97.7% in the year-ago period.
Completion factor refers to the percent of flights that are not canceled. While a higher completion factor is generally a good thing, lower cancellations mean that subsequent flights will have less people on them. When travelers’ original flights are canceled, they’re usually booked on later flights, making those completed flights more densely packed.
“The higher completion factor is positive for customer service and profitability, but the additional ASMs generally reduce TRASM results,” said American Airlines in its regulatory filing.
On a positive note, AAL still expects first quarter pre-tax margins, excluding special items, to be between 3% and 5%.
American Airlines Group Inc. shares fell $0.19 (-0.42%) in premarket trading Thursday. Year-to-date, AAL has declined -3.64%, versus a +5.83% rise in the benchmark S&P 500 index during the same period.
AAL currently has a StockNews.com POWR Rating of B (Buy), and is ranked #7 of 18 stocks in the Airlines category.
