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How American Airlines’ 2015 Annual Profits Increased by 50%

How American Airlines’ 2015 Annual Profits Increased by 50%
February 29
14:42 2016

Last week, the airline mogul, announced that their annual profits for last year increased by a whopping $2.1 billion, launching from $4.2 billion in 2014 to $6.3 billion. Although the growth was projected by financial analysts, these numbers were still higher than anticipated.

But, the road to success has been a rocky one for AA. With the dismal effect of September 11th on flight sales, along with the airline’s parent company AMR Corp having to file bankruptcy in 2011, the brand has certainly made a strong comeback. Ever since the merger with US Airways in 2013, AA is now the largest and most profitable airline in the world. American’s CEO, Doug Parker has praised the company for its financial success in 2015, a year where the company still was feeling tremendous growing pains from the recent merger.

The success of the year is mostly attributed to the significant reduction in fuel costs. The 42% decrease in fuel, accounts for $4.4 billion in savings.

Although, the company also reported that there was a 3.9% drop in total revenue for 2015. The company credits the decline to the drop in international fuel surcharges, the strong US dollar and a decline from markets in Brazil, Japan and China. Brazil’s share of the company’s revenue has dropped over 4%.

So what’s next for the airline? AA is expected to add 100 new air-crafts to its existing 938 in 2016. Even though the airline has $6.9 billion in cash, AA is financing the major aircraft purchase. The company has defended this decision, citing that they now have the ability to get financing at less than 4%. So, they don’t see the appeal of having their investors front that expense.

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Kerri Adams

Kerri Adams

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