AMR falls on slumping passenger traffic

American Airlines' system capacity was down 0.7% year over year in October.

By Trefis Nov 9, 2011 1:16PM
Echoing the broader market apprehension, shares of American Airlines parent AMR Corp. (AMR) finished the past week about 10% lower. On Wednesday, shares were down nearly 1% to $2.32.

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.

Trefis Break-Up of American Airlines

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.


Tags: amr
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

111
111 rated 1
272
272 rated 2
474
474 rated 3
656
656 rated 4
638
638 rated 5
699
699 rated 6
623
623 rated 7
486
486 rated 8
260
260 rated 9
128
128 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

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.