AMR's Unit Revenue Gain Again Leads Airline Industry

DALLAS (TheStreet) -- For the third consecutive month, American (AAMRQ.PK) reported the airline industry's biggest unit revenue gain in June -- 8.6% -- an indication that the carrier is apparently becoming healthier while sheltered from creditors in bankruptcy court.

"American's investments in its network and alliances and product and services are starting to pay dividends," said Virasb Vahidi, AMR senior vice president and chief commercial officer, in an interview after the carrier reported that its June passenger revenue per available seat mile, a common industry metric, rose by about 8.6% from the same month a year earlier.

United (UAL) reported late Monday that its June PRASM gained 5% to 6%. Earlier, Delta (DAL) reported a May PRASM gain of 8%, while Southwest (LUV) and US Airways (LCC) both reported gains of around 6%.

American also outperformed its rivals in April and May PRASM, and it earlier reported that May was the second month of operating profits, all indications of the carrier's progress since it filed for bankruptcy protection in November. Potentially, the ability to operate profitably could be the best defense against a merger effort by US Airways.

Vahidi said American is benefiting from improved results across the Atlantic and Pacific, where it shares revenue with partners; from continued strength in Latin America, and from gains and renewals in corporate accounts.

"This year we have won and renewed more corporate contracts than in the same period last year," he said. Ticket pricing has been stronger in every region, he said.

A major problem for American as it approached bankruptcy was that the anticipated gains from the trans-Atlantic partnership with British Airways and Iberia were slow to kick in after regulators approved the arrangement in July 2010. Now the partnership is paying off, even though American said its trans-Atlantic traffic, as measured by revenue passenger miles, decreased 5.5% in May, as compared with a year earlier. However, American cut 6.6% of its trans-Atlantic capacity, so its load factor increased by 1.1 points to 90.6%.

Overall, American cut capacity by 2.6% but its traffic decreased by 1%. Domestic traffic decreased by 3.5%, while traffic decreased by 2.2%. International traffic was flat on 2% less capacity. Pacific load factor growth led other sectors, increasing by 7.1 points to 91.8%.