AA DFW Flagship Lounge Opening, Plus Everything We Learned from AA’s Earnings Call
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With its stock down nearly 50% from its January 2018 high, American Airlines released its third-quarter earnings and held an investor call Thursday morning. Although operating income and net income both dropped by 48% from the same period in 2017, the airline did better than analysts expected.
In the presentation and subsequent Q&A session, AA management shared a variety of interesting updates. But, perhaps the most relevant to flyers is AA’s announcement of when its Dallas/Fort Worth Flagship Lounge and Flagship First Dining will open: first quarter of 2019.
Or, maybe not. While AA management dropped the Q1 2019 announcement in its presentation, an airline spokesperson hedged the position in a follow-up statement:
We’re hopeful to open DFW D Flagship Lounge and Flagship First Dining towards the end of the first quarter, but please keep in mind that it is a construction project and delays may happen. I wouldn’t want to disappoint your readers by promising first quarter when it may be a little later.
Either way, this is much earlier than what was expected. When the DFW Terminal D Admirals Club lounge closed in April 2018, lounge employees shared that the project would take 18 months. Now it seems the airline will be able to open its Flagship Lounge in its most profitable hub (more about that later) just a year after starting the process.
This lounge will be fifth Flagship Lounge location to open, joining New York Kennedy (JFK), Miami (MIA), Chicago (ORD) and Los Angeles (LAX). It will also be the fourth Flagship First Dining location.
Some other things we learned from the call:
Flight Attendants: The flight attendant scheduling system merger was finished last quarter. This will allow FAs to change between legacy AA and legacy US Airways crew bases. And it should help AA operationally, making it quicker to recover from operational disruptions.
Premium Economy: American Airlines now has 92 widebody aircraft with premium economy installed. Management now says that the retrofits will be completed “by next summer.” On average, AA has been able to charge “double the coach fare” for premium economy, although it didn’t clarify if this was double the Basic Economy or Main Cabin fare.
New aircraft: American Airlines has taken delivery of 600 aircraft since the AA-US Airways merger. In total, CEO Doug Parker notes that it has invested $25 billion in aircraft in the past few years. It expects to slow down aircraft acquisition growth over the next few years — that is, after it finishes taking delivery of another 47 Boeing 787 Dreamliners. So, you likely won’t see a large aircraft order by AA anytime soon.
Most Profitable Hub: It might not be surprising to hear, but AA management confirmed that Dallas/Fort Worth was its most profitable hub. It’s working on adding 15 new gates at DFW. The airline is also working on adding 7 new gates at Charlotte (CLT) that’ll let it add 75 more daily flights.
Basic Economy: Management claims that adding free carry-on bags to Basic Economy fares hasn’t hurt the percentage of travelers that buy up from Basic Economy to Main Cabin. And, this change has allowed AA to expand Basic Economy into more markets, presumably where it competes head to head with Delta and wasn’t competitive with the no-carry-on policy.
Corporate buyouts: More than 100 executives took the retirement package offered earlier this year. AA executives admitted that this was more than they expected. No layoffs of front-line employees are expected.
Alipay in China: American Airlines is (finally) accepting the widely-used Alipay payment service as a payment option in China.
Management pushing stock price: AA management aggressively sold investors on the airline’s stock in the earnings call. Quotes from management about the stock included “extremely bullish,” “extremely optimistic,” “buying opportunity” and they “would be aggressive buyers at these levels.” From January through Thursday morning, AA’s stock has lost nearly 50% of its value, but it’s currently up more than 7% on Thursday.
Featured image courtesy of American Airlines