American Airlines tumbled the most in two years after lower-than-expected US fares dented a closely watched measure of pricing power. Revenue for each seat flown a mile probably only rose 1 to 3% in Q2, the world’s largest carrier said Wednesday in an investor update, cutting its earlier forecast by half a percentage point on both ends. Fare weakness is adding to the pressure on US airlines, which already are contending with a more than 50% jump in fuel prices over the last year. While summer travel demand is strong, American CEO Doug Parker has warned of the need for higher fares because of rising fuel costs. There is typically a six- to 12-month lag before carriers can raise ticket prices enough to compensate for the extra spending. “Increasing costs and competitive pressures have stifled American’s earnings potential,” Helane Becker, a Cowen & Co. analyst, said in a report. “In a rising jet-fuel environment, airlines should be raising prices, and investors expect yields to show improvement to offset higher labor and fuel costs.”<br/>
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A federal inspector assigned to monitor American Airlines Group failed to act on safety complaints after developing a friendship with a company official, according to a government watchdog report. The FAA inspector, who had been assigned to the carrier for 28 years and had taken an overseas trip with an airline manager, didn’t address what was later shown to be a legitimate tip about how the carrier assured aircraft were safe following maintenance work, the report said. Concerns raised by American’s pilot union, the Allied Pilots Association, went largely unaddressed for more than 18 months, according to the report, obtained by Bloomberg News. The FAA’s oversight of American’s flight-test program “lacked objectivity,” the report said. The FAA inspector, who has retired from the agency, wasn’t named in the report. The report by the Transportation Department’s Inspector General puts a focus on how well FAA is overseeing safety at air carriers at a time when the agency has stressed cooperation with airlines rather than issuing fines or taking other enforcement actions. Story has more details.<br/>
The operator of Los Angeles International airport has approved a new lease with American Airlines that allows the carrier to move forward with the first of $1.6b in planned works. American can move forward with construction of a new "terminal 4.5" core that will connect both terminals 4 and 5 at LAX with the planned automated people mover, following approval by the Los Angeles World Airports (LAWA) board of commissioners on 11 July. The $285m initial works also include the reconfiguration of gates on terminal 5 to add two more gates, and ticket counter and baggage claim areas. The works approved are only the first of a larger $1.6b, 15-year improvement plan for terminals 4 and 5 that American and LAX agreed to in 2017. Major aspects of that programme include the consolidated security checkpoint, a consolidated check-in area for the airline and other concourse improvements.<br/>