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American Airlines has revised its annual profit forecast upwards due to stronger pricing power and a successful recovery from previous sales strategy errors that resulted in a loss of corporate clients.

The airline’s initial strategy involved cutting perks and discounts associated with corporate travel contracts, ultimately backfiring and giving its competitors an edge. However, American has since made efforts to regain corporate clients by renegotiating contracts with travel agencies and reinstating benefits programs for business travelers.

CEO Robert Isom expressed confidence in the revamped sales and distribution strategy, which is expected to boost revenue performance over time. Improved pricing power, driven by reduced excess capacity in the domestic market, has also contributed to the company’s positive outlook.

American Airlines now anticipates adjusted earnings per share to range from $1.35 to $1.60, up from the previous forecast of 70 cents to $1.30. Despite this positive revision, the company’s shares dipped 1.8% as it projected a slight decline in total revenue per available seat mile (RASM) for the fourth quarter.

Additionally, unit costs are forecasted to increase by approximately 4% to 6% in the upcoming quarter. While the adjusted profit of 30 cents per share exceeded expectations, total operating revenue saw a 1.2% increase to $13.65 billion.

Analyst Stephen Trent noted that Q4’s RASM guidance fell slightly below expectations, with higher-than-expected unit costs growth. American Airlines remains optimistic about its revenue performance in the coming months, despite the challenges posed by fluctuating pricing power and operating costs.

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