Published on : Saturday, January 5, 2019
As airline fuel price rises, American Airlines cuts its flight service to major international cities.
The world’s largest airline American Airlines by revenue said Tuesday that it plans to cut flights from Chicago to Shanghai, Philadelphia to Munich, and Los Angeles to Toronto among 11 total routes that will be dropped later this year and early in 2019.
Investors fretted earlier this year that airlines were planning to add too many flights, potentially sparking a fare war that could threaten profitability. Then fuel prices began to climb, prompting airlines to pare back their plans to add routes.
They would add fewer flights than planned this year. American, Spirit and Delta also said they would raise ticket prices to recover some of the higher costs. Those plans have helped bolster airline shares after a deep slump this year. The NYSE Arca Airline Index has risen 10% since June, after a 20% drop in the first six months of the year. Shares in American rose 34 cents to $40.33 on Tuesday.
Jet-fuel prices have dropped a bit this month but are still up more than 30% from a year ago, according to the International Air Transport Association trade group.
American Airlines had previously said it would also suspend service between Chicago and Beijing this fall. American’s spokesman said the airline is maintaining service between the U.S. and China from airports including Dallas and Los Angeles.
Rival United Continental Holdings Inc. said last month that strong demand for flights to China helped boost unit revenue in its Pacific region 3.4% in its second quarter from a year earlier.
United President Scott Kirby, in an interview at an aviation conference in Denver on Tuesday, said American’s cutbacks were “probably indicative of a healthier industry where all airlines are willing to stop flying money-losing routes, which didn’t used to happen.” American is also adding nine international routes in Phoenix, Dallas and Philadelphia next year. Phoenix will get flights to London, while Dallas is slated to start new flights to Dublin and Munich. American Airlines will add flights from Philadelphia to cities including Berlin and Bologna, Italy.
Tags: america, fuel price