American Airlines shares fall 5% in fare squeeze with low-cost carriers

Dallas

AMERICAN Airlines Group shares fell the most among its US peers on Tuesday after the airline said that airfares are starting to drop as low-fare domestic rivals add seating capacity in some markets.

The squeeze is showing up in the industry gauge of passenger revenue per available seat mile (Prasm). That benchmark will decline by 2 per cent to 4 per cent this quarter, American Airlines said on Tuesday - a forecast that overshadowed news such as a US$2 billion stock buyback and US$5 billion in 2015 fuel savings.