“The industry has got to collect more revenue for its product”

AMR Corp.’s president and chief executive officer, Gerard J. Arpey, has reiterated that the industry has got to collect more revenue for its product.

Published: 20 Apr 2009

AMR Corp.’s president and chief executive officer, Gerard J. Arpey, has reiterated that the industry has got to collect more revenue for its product.

“We’ve been a consistent price leader in this industry and that’s not to say we’re not mindful of elasticity and mindful of the fact that you have to do promotional things and we certainly have to be competitive,” Arpey said recently, after sharing AMR Corp.’s first quarter results. “But the industry has got to collect more revenue for its product. And I think we have been a leader in unbundling our product, in taking risks to charge for services that otherwise end up being bundled in the product and given away for free,” he said, according to Seeking Alpha.

The parent of American Airlines, the AMR Corporation, lost $375 million in the first quarter.

Revenue fell 15 percent, to $4.84 billion, from $5.7 billion in the period a year earlier.

“During the quarter we paid about $550.0 million less for fuel than we would have paid at last year’s first quarter prices. Combined with our capacity reduction, total fuel expenses for the quarter declined by $750.0 million year-over-year,” said Arpey. “Unfortunately, that dramatic decline was outpaced by the decline in revenues with unit revenues for the quarter down over 8.5 percent versus last year and our total revenue was down over $850.0 million.”

“So in effect we’ve swapped the oil prices of 2008 for the travel demand crisis of 2009.”

Related links: American Airlines, Unbundling

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