How Will The FIFA World Cup Impact American Airlines’ 2Q’18 Traffic Numbers?

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As the FIFA World Cup 2018 kick-starts in Russia, millions of football fans across the world are expected to remain glued to their virtual screens to enjoy the game. However, the more loyal fans prefer not to stay home, and rather fly down to the venue to watch and support their favorite teams, live in action. While this promotes the spirit of the game, it is also a blessing in disguise for airline companies, who witness a surge in their traffic during such large scale sporting events. In this note, we compare American Airlines‘ (NASDAQ:AAL) traffic growth during previous football World Cups (2006 onward) and estimate the impact of the current game on its 2Q’18 numbers using our interactive dashboard.

An airline’s traffic is measured by its Revenue Passenger Miles, or RPM. It is the number of revenue-paying passengers multiplied by the distance traveled in miles. So, we compare American Airlines’ RPM figures in the quarters when the FIFA World Cup was being held. Since the event is held mostly in the second quarter of the calendar year, we look at the quarterly figures to understand the impact.

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In the last three games – 2006, 2010, and 2014 – we see that American Airlines’ second quarter RPM or traffic numbers have increased strongly compared to the previous year. To put things in perspective, AAL’s RPM rose 3%, 2.1%, and 2.4% on a year-on-year basis in the second quarter of the respective years. Now, given that American’s RPM, or traffic, rises sharply in the quarters in which the FIFA World Cup is conducted, we estimate its traffic to improve strongly in 2Q’18 as a result of the ongoing event. We anticipate an increase of 2.5% in AAL’s traffic based on the past trend, as well as the growing popularity of the game.

Feel free to create your own forecast by changing the inputs (blue dots) in our dashboard and visualize its impact on American Airlines’ traffic numbers.

Also view other key metrics for American Airlines – US Available Seat Miles, International Available Seat Miles, Passenger Yield, Load Factor, Fuel Expenses, Operating Income (EBITDA), Capital Expenditure.

 

Do not agree with our forecast? Create your own price forecast for American Airlines by changing the base inputs (blue dots) on our interactive platform.

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