How Will American Airlines Benefit From Its New Fleet Plan?
American Airlines, along with all other airlines, has benefited hugely from the low oil prices. Consequently, the low cost environment has enabled the carrier to refurbish, upgauge, and add more capacity to its fleet. While refurbishing will help the company provide its clients a more convenient and comfortable flying experience, fleet replacement will reduce its expenditure on depreciation and help save fuel costs.
As a part of its 2016 fleet plan, American’s total mainline aircraft will shrink by approximately a net of 37, as it takes delivery of 55 mainline aircraft and is retiring more than 90 mainline aircraft. We can expect the company’s fleet to stand at 909 mainline aircraft by the end of 2016.
- Should You Pick American Airlines Stock At $14 After A 6% Fall In A Week?
- With 20% Gains This Month Is Alaska Air A Better Pick Than American Airlines Stock?
- Which Airlines Stock Will Offer Better Returns – American Or United?
- What To Expect From American Airlines’ Q2?
- Will American Airlines Stock Recover To Its Pre-Inflation-Shock Level?
- Pick Either American Airlines Stock Or Its Peer – Both May Offer Similar Returns
*All numbers as of February 2016
The significant steps being taken by American to transform its fleet have resulted in the U.S. airline industry’s youngest and most fuel-efficient fleet. Average fleet age is an important factor in an airline’s performance. Usually, old airplanes cost more to operate due to their tendency to have higher maintenance expenses to keep up their performance. From the standpoint of operating costs, newer aircraft are preferred since they’re more economical to maintain.
Attracted by the enhanced overall customer experience, the carrier can be expected to maintain, and even grow its market share, in the face of intense competition from low cost players such as JetBlue and Southwest. Further, the savings from a fuel efficient fleet will lower the company’s operating costs, helping it offer the lowest airfares possible.
Have more questions about American Airlines (NYSE:AAL)? See the following links:
- Lower Unit Revenues, Higher Tax Provisions Weigh On American Airlines’ Q2’16 Results
- American Q2’16 Earnings Preview: Rising Oil Prices, Lower Unit Revenues To Weigh Heavily
- Here Are The Key Factors That Can Impact American Airlines’ Earnings Growth
- Here’s Why We Revised American Airlines’ Price Estimate To $46 Per Share
- American Airlines’ 1Q’16 Revenue And Earnings Decline; Investors Penalize Airline For Downward Revision Of 2016 Capacity Growth Target
- US Legacy Carriers: A Comparison Of Aircraft Fleet
- How Important Will American’s International Operations Be In 2020?
- How Will American Airlines’ Equity Value Move, If Crude Oil Prices Rebound To $100 Per Barrel By 2018?
- Why Are American Airlines’ Domestic Operations More Valuable Than Its International Operations?
- How Will American Airlines’ Equity Value Move, If Crude Oil Prices Average $50 Per Barrel In 2018?
- How Did American Airlines’ Revenue And EBITDA Grow Over The Last Five Years?
- How Did American Airlines Use Its Increased Cash Flows In 2015?
- How Will American Airlines’ Revenue And EBITDA Grow Over The Next Five Years?
- What Is American Airlines’ Fundamental Value Based On 2016 Estimated Numbers?
- How Has The Oil Slump Impacted American Airlines’ Operating Margins?
- How Has American Airlines’ Revenue And EBITDA Composition Changes Over The Last Five Years?
- What Is American Airlines’ Revenue And EBITDA Breakdown?
- US Airlines: A Comparison Of Operating Margins
- US Airlines: A Comparison Of Dividend Yields
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for American Airlines
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap