American Airlines on Wednesday forecast Q1 profit below market expectations, joining rival United Airlines to signal a hit from persistently high labor and fuel costs. The dull outlook pushed its shares more than 8% lower and weighed on other major US airlines. Delta Air Lines, which will kick off the earnings season on Thursday, fell 2.08%. Higher fares amid rising global travel have so far helped the airlines industry mitigate rising costs, but concerns over the sustainability of consumer demand have gained ground against the backdrop of high borrowing costs, inflation and job losses. American had in January said that its fuel price has increased by nearly 70%. The airlines industry has been able to survive the broader economic slowdown in the United States, thanks also to constrained airline capacity due to shortages of aircraft and spare parts. Indicating robust demand, American said it expects total revenue per available seat mile, a proxy for pricing power, to be up about 25.5% in the first quarter from a year earlier. However, on an adjusted basis, it forecast quarterly profit per share between 1 and 5 cents compared to a previous forecast of near break-even and analysts’ expectation of 6 cents, according to Refinitiv data. “American’s 1Q23 updated guide came in mostly at the mid-points of its initial guide provided in January, although we had expected American to come in towards the better end in a similar manner as JetBlue’s guidance update provided in mid-March,” said Raymond James analyst Savanthi Syth.<br/>
oneworld
Malaysia Airlines is to transfer domestic operations in east Malaysia to sister unit Firefly from 16 May, as part of a “strategic route rationalisation” on its domestic network. Parent company Malaysia Aviation Group (MAG) says Firefly will deploy its Boeing 737-800s on domestic flights within the states of Sabah and Sarawak following the transfer. Affected routes include between Kota Kinabalu and Sandakan, Tawau and Kuching, as well as between Kuching and Miri, says the group. Firefly will operate daily flights on the four routes, an up-gauge in capacity compared to Malaysia Airlines, which only only flies between two and five times a week with 737s. Rival low-cost carrier AirAsia Malaysia has a larger presence in intra-east Malaysian operations. On flights between Kuching and Kota Kinabalu for instance, AirAsia operates 21 weekly flights, while Malaysia Airlines only has five flights a week. The group adds: “The initiative represents a significant milestone in the strategic route rationalisation plan of MAG and a continuous assessment of its business operations.” The move means mainline operator Malaysia Airlines will only fly between Peninsular Malaysia and east Malaysia, as well as domestic flights within the Malaysian peninsula. It is also the most significant change made to the airline’s domestic network since it exited restructuring in 2021. Firefly, the group’s low-cost unit, introduced jets in 2022, taking delivery of 737s which formerly operated for Malaysia Airlines. The jets are based in its Penang hub, and are configured to seat 189 passengers in a single-class layout. The airline is also an ATR 72 operator, with the turboprop fleet based at Subang airport in Kuala Lumpur. MAG airlines chief Ahmad Luqman Mohd Azmi says the route rationalisation is part of efforts to “refine and improve its network and product offerings”. “The launch of Firefly’s jet operations in 2022 has elicited a considerable response, particularly within the leisure travel sector. This continuous milestone reiterates MAG’s unwavering commitment to remain responsive to the changing demands of its customers and leverage the prevailing market conditions,” he adds.<br/>