Wednesday, August 22, 2018

American Airlines Cuts Flights to Major International Cities as Fuel Prices Soar: Carrier says it’s committed to China, but Shanghai, Munich, Toronto among affected destinations



The Wall Street Journal
By Andrew Tangel
Updated Aug. 21, 2018 4:53 p.m. ET

American Airlines Group Inc. is cutting some unprofitable international flights as U.S. carriers adjust their business plans to reflect higher fuel prices.

The world’s largest airline by revenue said Tuesday that it plans to cut flights from Chicago to Shanghai, Philadelphia to Munich, and Los Angeles to Toronto among 11 total routes that will be dropped later this year and early in 2019.

“They’re not sustainable,” a spokesman for American said. American is also reducing the frequency of a handful of international flights.

Investors fretted earlier this year that airlines were planning to add too many flights, potentially sparking a fare war that could threaten profitability. Then fuel prices began to climb, prompting airlines to pare back their plans to add routes.

Delta Air Lines Inc., Southwest Airlines Co., Alaska Air Group Inc., Spirit Airlines Inc. and Allegiant Travel Co. each said in July that they would add fewer flights than planned this year. American, Spirit and Delta also said they would raise ticket prices to recover some of the higher costs.

Those plans have helped bolster airline shares after a deep slump this year. The NYSE Arca Airline Index has risen 10% since June, after a 20% drop in the first six months of the year. Shares in American rose 34 cents to $40.33 on Tuesday.

Jet-fuel prices have dropped a bit this month but are still up more than 30% from a year ago, according to the International Air Transport Association trade group.

American had previously said it would also suspend service between Chicago and Beijing this fall. American’s spokesman said the airline is maintaining service between the U.S. and China from airports including Dallas and Los Angeles.

“We’re committed to Asia, and China in particular,” he said.

Rival United Continental Holdings Inc. said last month that strong demand for flights to China helped boost unit revenue in its Pacific region 3.4% in its second quarter from a year earlier.

United President Scott Kirby, in an interview at an aviation conference in Denver on Tuesday, said American’s cutbacks were “probably indicative of a healthier industry where all airlines are willing to stop flying money-losing routes, which didn’t used to happen.”

American is also adding nine international routes in Phoenix, Dallas and Philadelphia next year. Phoenix will get flights to London, while Dallas is slated to start new flights to Dublin and Munich. American will add flights from Philadelphia to cities including Berlin and Bologna, Italy.

Original article can be found here ➤ https://www.wsj.com

1 comment:

Anonymous said...

I continue to be a loyal Delta customer, even though I live in California where the market is more competitive. Norwegian Air and Wow! offer bargains for international travel, making such routes more competitive.

I am surprised that the seats get thinner and thinner. Last year after purchasing an economy seat, the middle seat didn't sell. I sat next to a screaming and kicking baby for over six hours. I would rather have an exit row seat any day over economy comfort.