American Airlines Boeing 777-200 Landing

The airline announced April 20th 2011 its first quarter results marked by modest improvements over last year’s first quarter. The $436 million quarterly net loss compared favorably to last year first quarter loss of $505 million. This latest result is taking place in a high fuel price environment which is negatively impacting a noticeable global recovery industry-wide. The airline encountered a 24% increase in fuel price that translated to a $351 million surcharge for the quarter alone.

In an effort to address soaring fuel prices and aggressively control costs the airline is proceeding with the retirement of 25 older MD-80s. The resulting decrease in capacity is in keeping with the 0.5% fall in domestic market capacity observed compared to last year.

The planned introduction of 2 Boeing 777-300ER as announced in a January 2011 order with manufacturer Boeing has now been increased to 5 aircraft due for delivery in 2012 and 2013. The introduction of the larger fuel efficient aircraft is indicative of the airline fleet renewal program as well as the pursuit of business opportunities on international markets. In fact American Airlines which has operated 47 Boeing 777-200ER beginning in 1999 is the first US based airline to order the 777-300ER version. The boost in capacity that the 777-300ER can provide particularly on pacific routes will allow the aircraft to offset the limited number of slots resulting from bilateral agreements with China and ‘anti thrust immunity clause’ partnership with Japan Airline. Fundamentally a 6.2% rise in capacity on international routes (year-to-date), increasing partnership with foreign airlines (Qantas, Japan Airline) and more direct flights to international destinations will sustain the airline recovery.

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