American Airlines Group - Second quarter earnings overview (Part 4 of 11)
In 2Q14, total revenue increased by 10.2% driven by growth in revenue in all three segments: passenger, cargo and other revenues. Total revenue per available seat mile (or RASM) also increased to 16.68 cents from 15.6 cents in 2Q13 on a combined basis (combined the pre-merger results of American Airlines and U.S. Airways in 2Q13 to make it comparable to 2Q14).
Total passenger revenue including mainline and regional revenue increased by 9% to $9,920 million due to a 3.1% increase in capacity (available seat miles) and 6.5% increase in yield (average fare per passenger per mile). The decrease in load factor which is a measure of capacity utilization was offset by the increase in available seat miles leading to a 2.5% increase in Revenue Passenger Miles (or RPM). Passenger revenue per available seat miles (or PRASM) in 2Q14 was 14.57 cents, an increase of 5.9% from 13.76 in 2Q13.
Driven by increase in transatlantic freight volume, American’s cargo revenue increased by 8.3%. Cargo ton miles (a measure of volume) increased 6.4% to $595 and cargo yield per ton mile increased to 37.16 cents in 2Q14 from 36.56 cents in 2Q13.
Higher revenues from American Airlines’ frequent flyer program, AAdvantage, have driven the 20.5% increase in other revenue. Other revenues which comprised almost 11% of the total revenue includes revenue from marketing services related to sale of mileage credits ,membership fees and revenue from Admirals club operations apart from other miscellaneous service revenue like administrative service charges and baggage handling fees.
Revenue per available seat miles (or RASM) measures the efficiency of airlines by their ability to generate maximum revenue from a single unit of capacity. American’s Revenue per available seat mile (or RASM) of 14.57 cents was higher than United’s (UAL) 14.21 cents, Southwest’s (LUV) 13.94 cents and JetBlue’s (JBLU) 12.05 cents. Delta’s (DAL) however was higher at 14.99 cents.
Browse this series on Market Realist:
- Part 1 - Overview: American Airlines Group’s second quarter earnings
- Part 2 - Must-know: Major integration and network developments post-merger with U.S. Airways
- Part 3 - America Airlines’ operational performance in 2Q14:
- Investment & Company Information
- American Airlines
- passenger revenue
- available seat miles