Premium seats help push airlines higher following third-quarter results
Shares of American Airlines are climbing toward the carrier’s best trading day since August 12, when ultra-budget rival Spirit issued its initial warning about its ability to survive. American’s shares are up more than 7% on Friday afternoon.
Investors’ optimism comes a day after American posted a better-than-expected full-year earnings forecast. In a call with investors, American said that it’s ramping up its premium cabin offerings.
“Our ability to grow capacity in premium markets will be further supported as we take delivery of new aircraft and reconfigure our existing fleet. These efforts will allow us to grow our premium seats at nearly two times the rate of main cabin seats,” CEO Robert Isom said. American CFO Devin May said that nose-to-tail retrofits of certain wide-body jets will bump the number of premium seats available on those planes by 25%.
Extra legroom has been a boon for major carriers, particularly this quarter. Delta Air Lines said its premium product revenue grew 9% in Q3, compared to a 4% drop in economy seat revenue. Similarly, United Airlines said its premium revenue grew 6%, outpacing economy. Shares of both airlines were up more than 3% on Friday.
Carriers with less exposure to first- and business-class tickets like Southwest Airlines and JetBlue didn’t see the same amount of momentum on the day.
