American Airlines Group Inc. AAL plans to step-up services on international flights with the rollout of Premium Economy. The service will be available on Boeing 787-9s starting late 2016.
The service will offer more leg space, priority check-in and boarding, on-board entertainment options, comfortable seats, better meal options along with liquor and unlimited Wi-Fi usage. Moreover, passengers can check in two bags for no extra cost. The Premium Economy flight service will be available to Business Class and Main Cabin passengers.
These value-added services will not only improve customer satisfaction but also retain passengers for the premium carrier. Moreover, it will help American Airlines arrest customer churn and counter competition from other international carriers.
Meanwhile, American Airlines posted impressive air traffic numbers for the month of November. Traffic – measured in revenue passenger miles (RPMs) – stood at 16.86 billion, up 4.3% from 16.16 billion recorded a year ago. A substantial rise in travel demand during Thanksgiving drove the upside in traffic.
On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) dropped 0.2% to 20.76 billion. However, the load factor or percentage of seats filled by passengers decreased to 81.2% from 77.7% in Nov 2014. Meanwhile, American Airlines projects a 5% to 7% year-over-year decline in PRASM (passenger revenue per available seat mile) for fourth-quarter 2015.
Zacks Rank & Stocks to Consider
American Airlines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space are SkyWest Inc. SKYW, Hawaiian Holdings, Inc. HA and Delta Air Lines Inc. DAL. Both SkyWest and Hawaiian Holdings sport a Zacks Rank #1 (Strong Buy) while Delta Air Lines carries a Zacks Rank #2 (Buy).
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