American Airlines is adding flights to and from New York, raising the stakes in a showdown pitting the nation's largest carrier against Continental Airlines Inc and JetBlue Airways Corp.
American said yesterday that it will begin nonstop service between New York and Las Vegas -- a JetBlue stronghold -- in September and add a few flights to other cities, including San Francisco.
The appeal of New York is obvious. It is the US' largest city, a major tourist destination and a hub for international flights.
Perhaps even more important to American, New York is the nation's financial center and home to a large chunk of the Fortune 500.
This creates a large number of first- and business-class travelers.
"They buy the premium seats and they fly the premium business routes -- LA, Heathrow [and] Asia. It's of particular interest to us because it's a lucrative corporate market," said David Cush, senior vice president for global sales at American's parent, AMR.
American is putting US$1.1 billion into a new terminal at New York's John F. Kennedy International Airport.
It is also spending about US$20 million to add amenities such as lie-flat seats and flat-screen TVs in first class on its Boeing 767 fleet, which will be used heavily in New York service, Cush said.
Meanwhile, JetBlue said on Wednesday it expects to post an operating loss for the first quarter, due to higher fuel prices and the lingering effects of service interruptions from a Feb. 14 ice storm in the New York area.
JetBlue expects first-quarter operating margin of negative 4 percent to negative 2 percent, based on assumed fuel costs of US$7.15 per liter.
The company previously forecast a quarterly operating margin of 2 percent to 4 percent on assumed fuel costs of US$7.23.
Operating margin measures operating income as a percentage of operating revenues. A negative operating margin indicates that the company's operating costs are rising faster than projected sales.
The company also now estimates it will report an operating margin in the full year of between 8 percent and 10 percent, based on assumed fuel costs of US$7.34 per liter.
The company previously forecast a full-year operating margin of between 10 percent and 12 percent on assumed fuel costs of US$7.30.
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