American Airlines Group Inc. is planning to step up growth this year, extending efforts to expand at key airports.

Capacity of flights and seats will rise as much as five per cent this year, American said in a statement Thursday. That’s a significant increase from last year’s 1.1 per cent expansion. The growth will be focused on hubs such as Dallas and Charlotte, North Carolina, where American can use its dominant position to extract higher fares.

Key Insights

• American’s outlook for pricing power is in line with forecasts by Delta Air Lines Inc. and United Airlines Holdings Inc. American said its revenue from each seat flown a mile, a benchmark for pricing power, will be flat to up two per cent this quarter.
• Nonfuel costs for each seat flown a mile will rise as much as four per cent in the first quarter, American said. But that measure, an indicator of efficiency, excludes the effects of new labor contracts. American is in talks with unions for pilots, flight attendants, and mechanics and other airport ground workers.
• American is one of three U.S. airlines hobbled by the prolonged grounding of the Boeing Co. 737 Max. The flight ban that started last March cut $540 million from American’s pretax profit last year, and it’s unclear when the jet might return to service. The Fort Worth, Texas-based carrier has pulled the plane from its schedule until June 4.

Market Reaction

American rose one per cent to US$27.60 before the start of regular trading in New York. The stock dropped 4.7 per cent this year through Wednesday, the second-biggest decline in a Standard & Poor’s index of the five largest U.S. airlines.

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• Fourth-quarter adjusted earnings climbed to US$1.15 a share, just ahead of the US$1.14 expected by analysts. Revenue increased 3.4 per cent to US$11.3 billion, in line with expectations.
• American said it expects earnings this year of US$4 to US$6 a share, compared with the $5.09 average of analyst estimates.