American Airlines plans to come back strong after MAX grounding with aggressive growth
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
American Airlines is ready to bounce back from the Boeing 737 MAX grounding with aggressive growth plans for 2020.
The Oneworld Alliance carrier plans to grow capacity by 5% — roughly double its annual target of matching U.S. economic growth – CEO Doug Parker said during a quarterly earnings call on Thursday.
Nearly a third of the planned growth is directly attributable to the MAX grounding, which has forced American to cancel upwards of 140 flights a day, said American’s network head Vasu Raja on the call. The balance, or roughly 3.5%, remains higher than its annual target and will come from larger aircraft gauge – like replacing a 160-seat Boeing 737-800 with a 196-seat Airbus A321neo – and new flights or routes.
This accelerated growth was not unexpected. Wall Street analysts have warned of a coming bump in capacity when the MAX returns to service, which American expects in mid-January. Higher rates of growth tend to benefit consumers who may see lower fares, but at the same time depress an airline’s revenues.
Related: Why American is headed to Africa
American will phase the 24 737 MAX 8 aircraft it has in its fleet back into service once regulators re-certify the aircraft, airline president Robert Isom said. That alone will be an immediate boost over 2019 capacity, which saw the MAX exit in March.
In addition, American hopes to take delivery of as many of the 26 MAX that, prior to the grounding, it was scheduled to have by the end of 2020. Roughly 10 of these aircraft have already been built, said Isom.
The MAX aside, American is ramping up both domestic and international growth next year. The carrier has already announced new service to Casablanca (CMN), a return to Tel Aviv (TLV) and an expanded schedule to Tokyo Haneda (HND).
American will continue to grow at what it says are its most profitable hubs – Charlotte (CLT), Dallas/Fort Worth (DFW) and Washington National (DCA) – in 2020. The airline hopes to replicate the positive results that it saw in Dallas/Fort Worth where it added more than 100 flights this year in Charlotte next year.
The Charlotte growth is enabled by seven gates at the airport that American will take control of by year-end. A new concourse under construction at Washington National will allow it to replace 50-seat jets with larger models from 2021.
Parker called this targeted hub growth both “efficient” and “margin accretive” in his comments.
— Edward Russell (@e_russell) October 17, 2019
American has also resumed its “Project Oasis” initiative that adds seats to some narrow-body jets in its fleet. The program was paused in May when it became clear the MAX would not return to service shortly and recently resumed with A321s gaining up to nine seats for 190 total, and 737-800s 12 seats for 172 total.
Featured image courtesy of American Airlines.
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.