American Revises 2015 Forecast, Lowers Expectations For Total Capacity Growth

American Airlines Group Inc. lowered its forecast for full-year total capacity growth Friday, maintained its second-quarter passenger revenue per seat guidance and reported June revenue passenger miles up 2.8 percent year-over-year.

The Fort Worth-based airline said it now expects full-year 2015 total system capacity growth to rise roughly 1 percent from fiscal 2014, down from its previous guidance of 2 percent, according to Friday’s filing with the Securities and Exchange Commission. American sees fiscal 2015 domestic capacity up 1 percent to 2 percent year-over-year, and international capacity up 1 percent over the same period last year.

The airline reiterated its second-quarter 2015 guidance of a decline in consolidated passenger revenue per available seat mile (PRASM) of 6 percent to 8 percent year-over-year. American continues to expect its second-quarter pretax margin, excluding special items, to be between 16 percent and 18 percent.

American reported that June total revenue passenger miles (RPMs) were 20.4 billion, up 2.8 percent over June 2014. Total capacity was 23.9 billion available seat miles (ASMs), up 2.4 percent over the year-ago period. Total passenger load factor rose 0.4 percentage points to 85.4 percent versus June 2014.

In addition, American reported that as of June 30, it held roughly $9.7 billion in total cash and short-term investments, $747 million of which was restricted, and an undrawn revolving credit facility of $1.8 billion. Nearly $629 million of American’s unrestricted cash and short-term investment balance was held in Venezuelan bolivars:  $621 million valued at 6.3 bolivars and approximately $8 million valued at 12.8 bolivars.

“These rates are materially more favorable than the exchange rates currently prevailing for other transactions conducted outside of the Venezuelan government’s currency exchange system,” American said in the filing. “During 2014, we significantly reduced capacity in the Venezuelan market and we are no longer accepting bolivars as payment for airline tickets.”

American said it is monitoring the situation in Venezuela and evaluating its holding of Venezuelan bolivars for foreign currency losses or other accounting adjustments, which could be material, “particularly in light of the additional uncertainty posed by the recent changes to the foreign exchange regulations and the continued deterioration of economic conditions in Venezuela.”

The airline expects fuel costs between $1.88 and $1.93 per gallon of mainline jet fuel (including taxes) in its second quarter.

American Airlines Group is the holding company for American Airlines, US Airways, and regional partners American Eagle and US Airways Express. Together, the airlines operate nearly 6,700 flights per day to 350 destinations in over 50 countries.

[Photo: American Airlines]