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Unmanaged Accounts Lead American Q2 Corp. Travel Recovery

American Airlines’ business travel revenue “fully recovered” compared to 2019, led by unmanaged or lightly managed accounts, as the carrier posted the highest quarterly revenue in its history in the second quarter, American reported Thursday.

Business revenue recovered 51 percent for January, but recovered 110 percent for June, according to an earnings presentation.

American generated second-quarter revenue of $13.4 billion, a 12.2 percent increase over the same period in 2019.

“This is a record for any quarter in our company’s history,” American CEO Robert Isom said on an earnings call Thursday. “These results were achieved while flying 8.5 percent less capacity than in 2019.”

American reported second-quarter net income of $476 million, up from $19 million a year earlier and the first time the carrier has made a profit without U.S. government aid since the pandemic began.

Isom said revenue from combining small and medium-sized businesses as well as business and leisure customers is “outpacing our managed corporate revenue recovery”. Most of this revenue growth “came directly through our website, bypassing traditional channels.”

As much as 75 percent of Americans’ income was once identified or self-classified in a binary way as business or leisure, but “now it’s only 50 percent,” said Vasu Raja, American’s chief commercial officer.

Historically, revenue from trips identified as business accounted for 40 percent to 45 percent of total revenue, King added. Of that business revenue, what Americans consider unmanaged or small businesses represents about 60 percent of the revenue, with the rest generated by large corporations with managed travel programs.

The unmanaged business segment recovered 125 percent to 130 percent from 2019 levels, while the contracted corporate business recovered about 75 percent to 80 percent, Raja said.

“There are going to be more and more unmanaged businesses,” he said, adding that this is a relatively sustainable trend and will continue. “Indeed, we’re seeing even with those accounts that are contracted corporate accounts, as we emerge from the pandemic, they’re implementing less and less travel policies and doing a lot of what they’ve contracted anyway.”

Performance metrics, Outlook

Second quarter 2022 passenger revenue was $12.2 billion, up from $6.5 billion a year earlier. Domestic capacity was down 6.6 percent for the period compared to the second quarter of 2019, while international capacity was down 12.1 percent.

American operated more than 500,000 flights last quarter, an 8 percent increase year over year, with a load factor of 87 percent, up 10 points from a year ago. The carrier had more than 53 million passengers during the quarter, according to the company.

Although April and most of May were solid, American, like other carriers, saw stronger-than-expected demand from Memorial Day through June and experienced “significant weather on 27 of the 30 days” in June, Isom said.

“Looking forward, we will be limited by the resources we have and the operating conditions we face,” Isom said, but its on-time departures, on-time arrivals and completion factors for the quarter were better than second. quarter of 2019.

Capacity guidance for Q3 is down 8 percent to 10 percent from 2019, and for the full year of 2022 is down 7.5 percent to 9.5 percent. Total revenue for the third quarter is expected to increase 10 percent to 12 percent compared to 2019.

Average fuel costs for the second quarter were $4.03 per gallon and are expected to be between $3.73 and $3.78 per gallon for the third quarter.

During the quarter, American took delivery of five Airbus A321neo aircraft and reactivated nine Boeing 737-800s from long-term storage, American Eagle vice chair, CFO and president Derek Kerr said. The company has also introduced a new business-class fare and its new Prime Selection fare aimed at corporate customers.

Related: American Q1 results


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