American Airlines plans to come back strong after MAX grounding with aggressive growth

Oct. 24, 2019

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3 min read

American Airlines plans to come back strong after MAX grounding with aggressive growth

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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.

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.

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.