American Airlines’ total business travel demand is recovered by about 80% from 2019 levels as revenues for small and medium-sized businesses approach a full recovery, CEO Robert Isom said Thursday during a briefing. a first quarter earnings call.
Revenues from large corporate clients are clawed back at approximately 50%.
“Corporate bookings are at their highest since the start of the pandemic, and we expect that to continue as more businesses reopen their offices,” Isom said. “We expect business revenue to be 90% recovered in the second quarter.”
Long-haul international travel recovered about 50% for the quarter and 60% for March, Isom added.
The company expects business travel as well as international demand to continue to return and, although fuel prices remain high, it expects to be profitable in the second quarter based on current demand trends and forecasts. fuel prices.
American is also seeing a shift in what it calls “blended” travel – combining business travel with leisure. Historically, they’ve accounted for about 20-25% of trips, but in the past five to six months, about 50-55% of trips have been mixed, said U.S. chief commercial officer Vasu Raja.
“These blended trips in the system are coming in at returns that are 75% to 85% of what was real business-only travel, but they’re going through lower-cost channels of sale and out of negotiated discounts, so the net their output is very often the best in the system.”
American sets monthly sales record in March
The carrier reported first-quarter revenue of $8.9 billion, representing an 84% recovery from the first quarter of 2019. Of that, $7.8 billion was passenger revenue.
U.S. sales in March set a monthly record, and it was the first month since the start of the pandemic that total revenue was above 2019 levels for the same period, the airline said. Still, the carrier reported a net loss of $1.6 billion for the quarter.
Based on current demand assumptions, American expects total revenue to be 6% to 8% higher than second quarter 2019 with capacity 6% to 8% lower, US CFO said Derek Kerr. “It would be the first time we’ve produced total revenue above 2019 since the start of the pandemic,” he said. “If we hit the midpoint of this earnings guide, the results would be the highest quarterly earnings in company history.”
Total capacity for the first quarter decreased by 10.7% compared to the first quarter of 2019. Domestic capacity decreased by 7.5% and international capacity decreased by 17.4%.
American expects full-year capacity to be 92% to 94% of 2019 levels, which represents a reduction in its full-year outlook from the prior, largely due to of 787 delivery delays, Kerr said.
Regional departures scheduled for the second quarter are down about 20% from 2019, while mainline departures are down about 5%, Kerr said.
Asked about its ability to handle summer demand, Isom noted that the company has hired more than 600 pilots and around 20,000 new employees, but the net number is around 12,000.
“We’re sizing the airline for the pilots we have…and these new team members are working in reservations, in airports, across the system, so we’ll be able to handle the summer,” Isom said. .
Source: Business Travel News