American Airlines just completed a quarter in which it reported the “highest quarterly earnings that any commercial airline ever reported in a quarter.” The earnings, $1.9 billion, were the highest the airline itself ever had in a quarter in its entire history, not a total surprise given that American is now the world’s largest airline.
On a conference call on Friday, airline executives provided details on their plans for the remainder of 2015 and beyond. Here’s what they covered:
FLEET
American has the youngest fleet “of any of the U.S. network airlines,” said Derek Kerr, the company’s chief financial officer. In the first half of the year, the carrier took delivery of 24 mainline aircraft and nine regional aircraft, parking 34 and 8 older jets respectively.
For the remainder of the year, American will take delivery of 31 mainline airliners and 29 regional planes, while it retires 53 and 22 respectively.
These numbers include the continued retirement of the MD-80 fleet. The vaunted airline will be “out of the fleet by the end of 2017,” consistent with previously announced plans.
FUEL PRICES
American is understandably proud that it refused to follow the industry trend in hedging oil prices. “We remain unhedged, and our financial results continue to see a material financial benefit from the significant year-over-year decline in crude oil prices,” said Kerr.
The carrier’s average mainline fuel price including taxes in the second quarter was $1.90 per gallon, a 37% quarter-over-quarter decline when compared to the $3.02 per gallon in the second quarter of last year. The lower fuel prices have driven down mainline operating costs per ASM, or available seat miles, by 11.8%. Excluding net special charges in fuel, American’s mainline cost per ASM was $0.877 in the second quarter, up 2.5% year-over-year.