(Reuters) -American Airlines (AAL) on Thursday raised its annual profit forecast on resilient travel demand and improved pricing power as airlines cut capacity.
The oversupply of airline seats in the domestic market during the US summer season had forced airlines to offer discounted seats to fill their planes, negatively impacting their revenues.
Since then, US airlines have limited their capacity. According to BofA analysts, annual domestic seat growth fell to 1.5% in October and November from 5.5% in July.
The company expects adjusted earnings per share of $1.35 to $1.60, compared to the previous forecast of 70 cents to $1.30.
American is also recovering from an earlier debacle in terms of its sales and distribution strategy. The airline tried to rework its contracts with business travel agencies and customers, cutting back on perks and discounts.
However, this strategy backfired and led to an exodus of business travelers, which dented revenues, damaged the airline’s image and gave its peers an advantage.
Since the misstep, the airline has taken several measures to win back these business customers. In July it said it was renegotiating contracts with travel agents and corporate clients.
The Texas-based airline reported a net loss of $149 million, or 23 cents per share, compared with $545 million, or 83 cents per share, a year ago.
The airline’s total operating revenue rose 1.2% to $13.65 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Arun Koyyur)
