An American Airlines Boeing 737 airliner from Austin arrives at JFK International Airport in New York as the Manhattan skyline looms in the background on February 7, 2024.
Charlie Tripalo | AFP | Getty Images
American Airlines Emirates said on Monday that 80% of its revenue this year will come from loyalty program members and passengers who buy more expensive tickets, compared to a 70% share in 2017.
U.S. and other airlines have poured billions of dollars into new cabins, lounges and on-board upgrades to meet the needs of high-spending travelers. american competitor, Delta Airlineshas repeatedly said that growth in premium revenue, which it sees as tickets for seats with extra legroom and upscale cabins, has become a larger share of its total sales and is growing faster than ticket sales in the coach cabin.
American said earlier Monday that it had ordered 260 new items BoeingAirbus and Embraer aircraft to renew their fleet, and they will work to modernize old Airbus aircraft to increase the size of first class cabins.
The US Revenue Forecast has been part of the first Investor Day in more than six years. It takes into account “premium content” tickets that cost more than the cheapest offers. The Fort Worth, Texas-based airline said it expects to increase its pre-tax profit margins in the coming years and eliminate its debt burden.
The carrier is in the process of renegotiating its credit card agreements with its partners, City And Barclays. Airlines make billions of dollars annually by selling frequent flyer miles to banks in exchange for co-brand cards or other loyalty credit cards.
US and other airlines have changed their loyalty programs to reward customers based on how much they spend rather than how much and how far they travel. Over the years, they needed higher spending to reach elite status.
Vasu Raja, American's chief commercial officer, said Monday that renegotiating contracts would increase American's revenue.
“If you ask any of our card partners, you'll find that they have very few, if any, cards in their portfolio that are showing good spending growth per active account and total acquisition growth on top of what we've done.” Raja said during his Investor Day presentation.
The carrier on Monday declined to provide earnings or revenue forecasts for the first quarter or the full year. Analysts polled by LSEG, formerly known as Refinitiv, expect 2024 earnings per share of $2.56 on revenue of $54.97 billion.
US stocks fell more than 5% on Monday.
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