The airline industry is reeling from its first quarter loss of more than $15bn, underscoring a continuing shift away from traditional routes and toward more frequent flights.
The airline industry reported a loss of $5.1bn in the first quarter on a sales-weighted basis, down from $6.6bn in Q1 2015, according to Bloomberg New Energy Finance data.
That compares with a loss rate of 16.1 per cent in the same period last year.
The industry’s losses, which include the $3.9bn in cancellations and the $1.5bn in delayed cancellations, have hurt the sector as it tries to reduce its reliance on short-haul flights.
More:The decline in long-haul revenue was a big drag on the industry, according a Bloomberg New Economy report.
“The loss of the long-tail was more significant than previously thought,” said Peter D. Shirk, a senior economist at Morningstar in New York.
The industry also was unable to deliver a significant increase in the volume of air travel and that contributed to a downward trend in passenger numbers.
Despite the drop in revenue, airline stocks soared in the quarter as investors piled into the sector and its airlines raised prices and other perks.
The biggest loser was American Airlines, which reported a net loss of nearly $1bn.
American is down 7.3 per cent from its $13.4bn loss in the fourth quarter of last year, according the company’s annual report.
The carrier, which operates the longest routes between Dallas and Los Angeles, is one of the biggest contributors to the growth of American.
More: The company is looking to refocus its efforts on the long haul, and a focus on connecting people in the US and abroad.
That will allow the company to invest more in its planes, which could improve its ability to handle an ever-growing number of customers.
The carrier’s CEO, Jim McNerney, told analysts he expects the company will continue to operate the fleet as it continues to evolve.
He said that in the long run, he expects American to continue to grow.
“Our strategy is not to go back to the way it was in the past.
It’s to do what’s right,” McNersey said in a conference call.
McNerney also said he expects more flights will be in the offing, as more Americans opt to fly out of the country for business.
“I think that we will see more business from the U.S. as a whole and the U