- American said 80% of 2024 revenue will be driven by its loyalty program and passengers who buy tickets that cost more than the cheapest seats.
- The carrier is planning to expand its domestic first-class seats on older aircraft.
- The airline declined to provide profit or revenue forecasts for the first quarter or full year.
American Airlines said Monday that 80% of its revenue this year will come from loyalty program members and passengers who buy more expensive tickets, up from a 70% share in 2017.
American and other carriers have poured billions of dollars into new cabins, lounges and onboard upgrades to cater to high-spending travelers. American’s rival, Delta Air Lines, has repeatedly said that growth in premium revenue, which it considers tickets for extra legroom seats and higher-end cabins, has become a bigger share of its overall sales and is growing faster than ticket sales in the coach cabin.
American earlier Monday said that it was ordering 260 new Boeing, Airbus and Embraer planes to revamp its fleet and that it would retrofit older Airbus planes to increase the size of their first-class cabins.
American’s revenue forecast is part of its first investor day in more than six years. It considers “premium content” tickets that cost more than the cheapest offering. The Fort Worth, Texas-based airline said it expects to grow pretax margins in the coming years and chip away at its debt load.
The carrier is in the process of renegotiating its credit card agreements with its partners, Citi and Barclays. Airlines make billions of dollars a year by selling frequent flyer miles to banks for their co-brand cards or other loyalty credit cards.
American and other airlines have changed their loyalty programs to reward customers based on how much they spend instead of just how much, and how far, they fly. Over the years they have required higher spending to reach elite status.
Vasu Raja, American’s chief commercial officer, said Monday that a renegotiation of the contracts would increase revenue for American.
“If you if you were to ask any of our card partners, they have very few cards, if any, in their portfolio that are exhibiting the kind growth in spend per active account and total acquisition growth as well as what ours has done,” Raja said during the investor day presentation.
The carrier declined on Monday to provide profit or revenue forecasts for the first quarter or full year. Analysts polled by LSEG, formerly known as Refinitiv, are projecting 2024 earnings per share of $2.56 and revenue of $54.97 billion.
American shares fell more than 5% on Monday.
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Source: Business - cnbc.com
