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AMR Unit Revenue Leads Industry, Thanks to International

DALLAS -- (TheStreet) -- Despite its operational struggles, American Airlines (AAMRQ.PK) continued to post industry leading unit revenue numbers in September.

American's passenger revenue per available seat mile grew 4% in September, leading its network peers for the sixth consecutive month. In September, Delta's (DAL) PRASM was up half a percent, US Airways (LCC) was flat and United (UAL) said Monday that its PRASM was down between 2.5% and 3.5%. American said that absent its "operational challenges," the gain would have been 4.4%. PRASM was $12.03.

American's September on-time performance rate was about 59%, lowest in the industry, as some pilots elected to fly by-the-book, carefully writing up maintenance violations that might have been temporarily overlooked. Overall, American traffic fell by 2.8%, even as the carrier cut capacity by 3.4%.

The principal factor in the improvement was the increasing effectiveness of the carrier's international joint ventures across the Atlantic and Pacific, said Virasb Vahidi, senior vice president and chief commercial officer. For the month, international traffic grew 3.2% on 0.5% less capacity. In the Atlantic, the load factor grew by 4% to 86.9%.

"In the Atlantic, we are seeing the continuation of the strength of our joint business agreement with British Airways and Iberia: that is driving a fair bit of revenue performance," Vahidi said in an interview. "Latin America continues to show strength. And in the Pacific, our joint venture with Japan Airlines has a positive impact."

The domestic picture was not so bright, as traffic fell by 7.1% on a 5.5% capacity cut. Domestic load factor fell by 1.4 points to 80.5%. "We're not an outlier," Vahidi said. "Delta was down 2.8 points." Comparisons are tough, he noted. In a recent note, JP Morgan analyst Jamie Baker noted that comparisons suffered due to Jewish holiday timing, an additional Saturday in September 2012, the temporary cessation of the FAA tax in September 2011 and Hurricane Irene-related comparisons. "The best thing about September? It's over," Baker wrote.

Some analysts said that American's 2012 unit revenue performance has benefited from weak comparisons and from making route cuts that Imperial Capital analyst Bob McAdoo recommended in a May 2011 report.

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