AMR falls on slumping passenger traffic
American Airlines' system capacity was down 0.7% year over year in October.
During the week, the airline released its October traffic results along with that of peer Delta Air Lines (DAL) and expanded its loyalty programs, but neither of those actions helped lift sentiment for the stock.
American saw a 1% decline in October passenger traffic, with system capacity down 0.7% year over year. Capacity declines were led by domestic markets, where seat miles were curbed by 2%, while capacity on international routes rose 1.5% on increased Atlantic and Pacific flying.
Lower capacity resulted in fewer empty seats on domestic routes, but international occupancy suffered as traffic gains failed to keep pace with increased capacity. That resulted in 0.3% lower system loads year over year.
New partnerships expand frequent flyer benefits
In another noticeable development last week, American enhanced its loyalty program known as AAdvantage by entering into partnerships with Alaska Air (ALK) and Kingfisher Airlines.
The airline launched a frequent-flyer agreement withKingfisher, allowing members of each airline's loyalty program to earn and redeem miles on the other's network. American is also expanding its relationship with Alaska Airlines with a new agreement that gives certain loyalty program members such benefits as priority check-in and boarding, baggage-fee waivers, exclusive security screening lanes and preferred seating.
The new partnerships help American expand its frequent-flyer program to include more ways to earn and redeem air miles, besides improving benefits for high-value customers. While this goes a long way in building customer loyalty, redeemed frequent-flyer miles can also generate ancillary revenue streams through baggage fees, reservation-change fees, preferred-seating charges and redemption charges.
We currently have a Trefis price estimate of $6.20 for American Airlines.
Copyright © 2014 Microsoft. All rights reserved.
The company is scrambling to protect its equities arm, which could face declining volume and revenue as competitors close the gap.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.