I'm Not That Impressed by American Airlines' Unit Revenue Growth -- Yet

American Airlines Group (NASDAQ: AAL) posted incredible profit growth in the first couple of years following its merger with U.S. Airways. Merger synergies helped a bit, but the bulk of the profit growth was driven by a sharp decline in oil prices -- along with management's savvy decision to avoid fuel hedging. In 2015, American's year-over-year fuel cost savings exceeded $5 billion.

American Airlines' profitability has receded quickly since then. The carrier posted a pre-tax margin of 15.3% in 2015, but it would be lucky to achieve a 9% full-year pre-tax margin this year.

Nevertheless, American's management is confident about the future. Many investors seem to agree with this bullish outlook, particularly because the carrier's revenue per available seat mile (RASM) returned to growth more than a year ago. However, I'm not convinced yet that American Airlines' recent pace of unit revenue growth is sustainable -- or that it will be sufficient to drive strong profit growth.

Source: Fool.com