It’s no secret that American Airlines has pushed hard this year to increase bookings through direct or New Distribution Capability-enabled channels. Its efforts seem to be paying off.
During the third quarter, 78 percent of the carrier’s bookings came through “modern distribution technology,” which includes its website, mobile app and NDC-enabled channels, according to an earnings presentation, up from 67 percent one year prior. In pre-pandemic Q3 of 2019, 53 percent of bookings went through those channels.
“These are the most efficient distribution channels in our ecosystem, and we expect to see these trends continue into the fourth quarter and beyond,” American CEO Robert Isom said during a Thursday earnings call.
Though American’s overall third-quarter revenue was about flat year over year, the carrier during the quarter realized year-over-year growth in “corporate and government revenue, with a return to more traditional seasonality trends,” Isom said. That is continuing after Labor Day, with a “steady improvement in business travel” and “encouraging signs from both managed and unmanaged corporate customers, strong international demand, and historically high premium revenue both domestically and internationally,” American CFO Devon May said.
Notably, for the quarter, American’s business revenue was up 2 percent year over year, chief commercial officer Vasu Raja added. “We actually performed better year over year among contracted corporations than we had in a number of months prior to it.” In addition, the carrier’s cost of sale was down 13 percent. “We’re finding that we’re able to generate more revenues through less cost of sale, which is very encouraging to us,” Raja said.
Raja said the airline would continue to shift content, fare products, schedules and other items out of legacy technology “where we can’t provide customers the kind of shopping and service experience they expect.” He also referenced the new AAdvantage Business program announced this week.
Though the program is mainly geared toward small and midsized enterprises—and only American’s website, app and reservation-agent bookings count for rewards in the program—”AAdvantage is very much the platform upon which we will build all of our commercial programs,” Raja said. “Through AAdvantage Business, companies of all sizes can access our content in a way that’s cheaper, simpler, better servicing, and in a way that’s more rewarding for travelers. … We’re actually really encouraged by what we’ve seen, encouraged by its revenue production and look forward to continuing the momentum.”
The company also noted that the number of new AAdvantage loyalty accounts was up 50 percent compared with Q3 2019.
American Q3 Metrics
American reported record third-quarter operating revenue of nearly $13.5 billion, about even with Q3 2022 revenue. Passenger revenue, at more than $12.4 billion, also was nearly even with last year’s figure.
The carrier’s net loss for the quarter was $545 million compared with a $483 million profit a year prior. American operated more than 515,000 flights during the quarter with a load factor of 84 percent.
The carrier projects fourth-quarter capacity to increase 4.5 percent to 6.5 percent year over year, with full-year capacity up about 6.5 percent. Q3 fuel costs were $2.91 per gallon. Expected Q4 fuel costs are $3.01 to $3.11 per gallon.
