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American earns $2.9 billion 2014 net profit; decision not to hedge fuel pays off
Jan 27, 2015 Aaron Karp
American earns $2.9 billion 2014 net profit; decision not to hedge fuel pays off
Jan 27, 2015 Aaron Karp
American Airlines Group earned net income of $2.88 billion in 2014, the first full year following the December 2013 American/US Airways merger. The net profit reversed a combined net loss of $1.23 billion posted by the former American and US Airways in 2013.
American’s 2014 revenue was up 5.5% compared to American/US Airways combined 2013 revenue to $42.65 billion while expenses rose 1.5% to $38.4 billion, producing an operating profit of $4.25 billion, up 64.8% from combined operating income of $2.58 billion in 2013.
American’s 2014 mainline traffic increased 0.8% (compared to combined American/US Airways traffic in 2013) to 195.65 billion RPMs on a 2.4% rise in capacity to 237.52 billion ASMs, producing a load factor of 82.4%, down 1.3 points. Yield improved 4.4% to 15.74 cents.
Unlike rival US airlines, American does not engage in fuel hedging, allowing it to fully realize the benefits of the steep drop in oil prices in recent months. As a result, it anticipates significant fuel cost savings in 2015. CFO Derek Kerr noted that “all fuel savings go to the bottom line” since American is not hedging.
American chairman and CEO Doug Parker told analysts and reporters Tuesday, “We didn’t think it made sense to hedge. Large drops in fuel prices are quite costly to companies” that engage in fuel hedging.
Kerr said American hasn’t reconsidered fuel hedging even with oil prices at a low level. “It just doesn’t make sense,” he said. “Somehow you’ve got to convince yourself that you know better than the oil market experts. All the rationale for not hedging in the past still exists today. Oil prices are less, so the downside is less if you’re wrong.”
American plans to grow 2015 capacity 3% year-over-year domestically and 1.5% internationally, and Kerr said the plan won’t change even with oil prices low. “You won’t see any changes from us in the near future” on the capacity plan, Kerr said, noting that American is still planning for high fuel prices out of prudence and also is already fully using all of its training resources to meet its current capacity plan.
American management expressed strong satisfaction with how the merger integration process has gone so far. The major integration issue in 2015 is the merging of the two carriers’ reservation systems, which the company expects to be completed in the fourth quarter.
Parker said American is using profits primarily to “catch up” on passenger product investments that waned when American was enduring financial difficulties. “We believe we will be leapfrogging our competitors [in terms of product offering] shortly,” he said.
American’s 2014 revenue was up 5.5% compared to American/US Airways combined 2013 revenue to $42.65 billion while expenses rose 1.5% to $38.4 billion, producing an operating profit of $4.25 billion, up 64.8% from combined operating income of $2.58 billion in 2013.
American’s 2014 mainline traffic increased 0.8% (compared to combined American/US Airways traffic in 2013) to 195.65 billion RPMs on a 2.4% rise in capacity to 237.52 billion ASMs, producing a load factor of 82.4%, down 1.3 points. Yield improved 4.4% to 15.74 cents.
Unlike rival US airlines, American does not engage in fuel hedging, allowing it to fully realize the benefits of the steep drop in oil prices in recent months. As a result, it anticipates significant fuel cost savings in 2015. CFO Derek Kerr noted that “all fuel savings go to the bottom line” since American is not hedging.
American chairman and CEO Doug Parker told analysts and reporters Tuesday, “We didn’t think it made sense to hedge. Large drops in fuel prices are quite costly to companies” that engage in fuel hedging.
Kerr said American hasn’t reconsidered fuel hedging even with oil prices at a low level. “It just doesn’t make sense,” he said. “Somehow you’ve got to convince yourself that you know better than the oil market experts. All the rationale for not hedging in the past still exists today. Oil prices are less, so the downside is less if you’re wrong.”
American plans to grow 2015 capacity 3% year-over-year domestically and 1.5% internationally, and Kerr said the plan won’t change even with oil prices low. “You won’t see any changes from us in the near future” on the capacity plan, Kerr said, noting that American is still planning for high fuel prices out of prudence and also is already fully using all of its training resources to meet its current capacity plan.
American management expressed strong satisfaction with how the merger integration process has gone so far. The major integration issue in 2015 is the merging of the two carriers’ reservation systems, which the company expects to be completed in the fourth quarter.
Parker said American is using profits primarily to “catch up” on passenger product investments that waned when American was enduring financial difficulties. “We believe we will be leapfrogging our competitors [in terms of product offering] shortly,” he said.
AirAsia QZ8501 captain may have left his seat
Feb 2, 2015 Jeremy Torr
Unconfirmed reports from officials at the Indonesian National Transportation Safety Committee (NTSC) investigating last year’s Indonesia AirAsia QZ8501 fatal crash have suggested the captain was not in his seat at the time of the incident.
The co-pilot is believed to have been flying the aircraft at the time, when there were also storms in the area.
The Airbus A320 crashed into the Java Sea enroute from Surabaya to Singapore last December killing 162 passengers and crew. Initial data from the flight recorders has been analyzed, and report is due to be released internally this week.
Additionally, reports have surfaced that the aircraft’s flight augmentation computer (FAC) had seen recurring faults over the previous few days. This has given rise to concerns that this critical part of the auto-pilot system may have either been reset incorrectly or even disabled immediately prior to the crash, which occurred as the aircraft attempted to evade a thunderstorm.
The co-pilot is believed to have been flying the aircraft at the time, when there were also storms in the area.
The Airbus A320 crashed into the Java Sea enroute from Surabaya to Singapore last December killing 162 passengers and crew. Initial data from the flight recorders has been analyzed, and report is due to be released internally this week.
Additionally, reports have surfaced that the aircraft’s flight augmentation computer (FAC) had seen recurring faults over the previous few days. This has given rise to concerns that this critical part of the auto-pilot system may have either been reset incorrectly or even disabled immediately prior to the crash, which occurred as the aircraft attempted to evade a thunderstorm.
