* Carrier cuts operating margin forecast
* Bag fee, mileage policy changes set
* Shares off about 1 percent
(Adds United commentary on first quarter)
April 8 American Airlines Group on
Tuesday said flight cancellations due to bad weather hurt its
first-quarter results, joining other carriers that blamed the
weather for a drag on business during the period.
American grounded more than 34,000 flights in the first
three months of this year, reducing quarterly revenue by about
$115 million and operating profit by about $60 million.
The carrier cut its forecast for its operating margin to 5
percent to 7 percent for the first quarter, compared with a late
January view of 6 percent to 8 percent.
Flight cancellations tend to boost airline costs during the
first quarter, when winter storms hit the hardest. Five U.S.
carriers - American, Delta Air Lines, JetBlue Airways
, Southwest Airlines and United Continental
Holdings - have said disruptions from snow and ice
storms forced them to cancel at least 78,000 flights
United disclosed after markets closed on Tuesday that it
canceled about 35,000 flights in the first quarter, most of them
at regional carriers. It added the weather-related flight
cancellations hurt passenger revenue per available seat mile, or
unit revenue, which decreased between 1.5 percent and 2.5
percent compared with the 2013 first quarter.
Shares of some airlines ended lower on Tuesday, with United
down 2.3 percent at $43.31 and Delta was off 1.4 percent at
$33.51. American rose 0.6 percent to $35.98.
Delta said earlier this month that it canceled 17,000
flights in the first quarter, reducing profit by $55 million and
shaving $90 million from quarterly revenue. Delta had cut its
operating margin forecast to 6.5 percent to 7.5 percent from 6
percent to 8 percent, but said that measure would still top the
year-earlier first quarter's 3.5 percent.
Robert Mann, an aviation consultant in Port Washington, New
York, said new U.S. rules requiring more rest for pilots also
spurred cancellations. He said the shift of the Easter holiday
into April of this year from March of 2013 would likely hurt the
first quarter while aiding second-quarter results for airlines.
"The demand environment looks pretty strong," Mann said.
J.P. Morgan analyst Jamie Baker cut his first-quarter profit
estimate on American to 51 cents a share from an earlier 63
cents, citing the carrier's revised forecast. He raised his
second-quarter estimate to $1.65 from $1.48, citing strong
BAG FEE, MILEAGE REDEMPTION CHANGES
American Airlines, formed by the December merger of AMR Corp
and US Airways, also said on Tuesday that it would eliminate
free checked bags for passengers with full-priced economy
tickets and make other changes to its baggage and loyalty
program mileage redemption policies.
The carrier said the no-free-checked-bag policy would also
apply to travelers redeeming AAnytime miles under the American
loyalty program. Some higher-level frequent fliers in the
American and US Airways loyalty programs will be allowed one
less free checked bag, it added.
At the same time, American is lowering the amount of miles
required for loyalty program members to get free travel to
20,000 miles one way from 25,000 miles for most of the year. For
some of the busiest travel days, such as the Sunday after
Thanksgiving, 50,000 miles will be needed for frequent fliers to
redeem free flights.
The carrier said it would now allow two free checked bags on
flights to South America, eliminating a $70 charge for a second
bag. But American said it will start charging a fee for a first
checked bag to and from certain cities in Mexico.
American said some of its changes were designed to align its
policies with those of Delta and United. Delta announced in late
February that it would change its frequent-flier program to tie
miles earned to the amount spent on a ticket rather than the
distance traveled .
(Reporting by Karen Jacobs in Atlanta; Editing by Lisa Von Ahn,
Dan Grebler and Bernard Orr)