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American Airlines Groups Expecting up to 12% Operating Margin

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American AirlinesOn Wednesday in an update for investors, American Airlines Group gave an estimate of operating margin – operating profits as percentage of its operating revenues – to be between 10% and 12%.

The group expects it will have 1,540 planes in its fleet by the end of 2014, with 975 in American Airlines and U.S. Airways, with 565 in regional partner aircraft. That is 13 more from December of 2013.

It will pay between $2.95 and $3 a gallon for its fuel during the third quarter that just ended and expects to pay between $2.66 and $2.71 during the fourth quarter.

American Airlines by comparison paid $3.03 a gallon in the third quarter of 2013 and $3.04 a gallon as an average for the entire 2013 year.

Each change of one cent in fuel prices represents between $42 million and $43 million worth of operating expenses.

American expects its capacity in seat miles to go up by 2.2% for its mainline and its regional carriers.

Capacity on its mainline US Airways and American Airlines will increase 2.4%, which is 1% for its domestic routes and 5% on its international routes.

Unit revenues, which are revenues per seat available on miles flown, will increase between 0.5% and 1.5% during the recently ended third quarter.

In a release of its traffic, American Airlines said its traffic during September, combining AA and US Airways, was off by 0.2% compared to the same period one year ago, even though overall capacity was up by 1.6%. The load factor, or the percentage of overall seats filled fell 1.5% to end the quarter at 80%.

That decline was due to international flight loads dropping, particularly flights across the Atlantic. Officials from American as well as other airlines noted that supply now has exceeded demand increases on routes that are trans-Atlantic.

Atlantic loads fell to 79.6% during September, which was 8 points down from one year ago.

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