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American Airlines expects big fuel savings, negative 1st qtr unit revenue
January 27, 2015 / 3:33 PM / in 3 years

American Airlines expects big fuel savings, negative 1st qtr unit revenue

Jan 27 (Reuters) - American Airlines Group Inc on Tuesday forecast massive fuel savings in 2015 but negative unit revenue, sending its shares down more than two percent in morning trading.

The airline, the world’s largest by passengers since it merged with US Airways in 2013, expects its consolidated fuel expense to improve by $5 billion in 2015, its Chief Financial Officer Derek Kerr said during the company’s quarterly earnings call. It expects to pay between $1.71 and $1.76 per gallon in 2015, down from an average $2.52 last quarter.

Yet it forecast a two to four percent decline in unit revenue for the first quarter year-over-year. By contrast, competitors such as United Airlines said last week that they expect their unit revenue to be flat year-over-year, between negative one percent and positive one percent.

Passenger revenue per available seat mile “is being pressured in a number of markets where capacity is growing faster than demand,” American Airlines President Scott Kirby said during the quarterly call. “Higher year-over-year completion factor will be an earnings positive but will negatively impact PRASM, and we expect currency headwinds in all international regions from the strengthening dollar.”

The Fort Worth-based carrier forecast its total system capacity in 2015 to grow about two to three percent over 2014, primarily due to adding seats to its planes and to a higher completion factor.

It expects its first-quarter pre-tax margin to be between 13 and 15 percent. (Reporting By Jeffrey Dastin; Editing by Chizu Nomiyama)

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