AMR Corp., in a move likely to appeal to critics on Wall Street, will hold ’ capacity at current levels for at least the next two years while the operator bolsters its international network.
In the first substantive update on AMR’s reorganization since the company filed for Chapter 11 protection in November, the operator says it will expect international capacity to account for 44% of total supply by 2017, a six-percentage-point increase on current levels, while domestic available seat miles will fall from 62% to 58%.
The plan suggests that AMR will focus on New York, Los Angeles, Miami and Dallas/Fort Worth as gateways to its growing international network.
To achieve this shift, the company plans to raise capacity at some key hubs through code-shares to supplement the addition ofand 787 widebody aircraft to the mainline American fleet, particularly at New York John F. (JFK). “The airport is slot-constrained, but with certain code-shares, we can increase our presence in New York City and feed customers on our domestic and international flights out of JFK,” notes AMR in a statement.
But capacity at Chicago O’Hare International Airport is likely to shrink, according to the plan. AMR is focusing on “right-gauging” capacity there, with a greater emphasis on regional jets and small narrowbodies, such as the, to reverse the low yields currently generated by using 140-seat MD-80s.
Between the code-sharing plan and right-gauging, AMR expects to realize much of the $1 billion it had forecast from revenue improvements for its American Airlines division.
This mix of international growth and capacity constraint at home may placate some Wall Street analysts who have criticized AMR’s talk of growth while the industry shifts to less supply.’ hostile takeover bid for American Airlines is generally approved of on Wall Street because it disregards any talk of growth.
AMR’s new statement also takes aim at US Airways’ use of performance records as a reason to support its takeover bid, noting that American’s first-quarter maintenance delays and cancellations were at their lowest levels in five years, that on-time performance was the highest in 10 years and that its unit revenue grew 10.3% year-on-year.