(Rewrites, adds forecasts, company comment)
By Jeffrey Dastin
July 24 (Reuters) - American Airlines Group Inc on Friday said it is facing sharp declines in unit revenue for months to come, sending its stock down nearly 7 percent, even though the company posted its highest profit ever last quarter.
The world's largest passenger carrier expects revenue per available seat mile to fall between 6 percent and 8 percent this quarter. The decline could continue until the second half of 2016, President Scott Kirby told investors Friday
The forecast bodes poorly for the U.S. industry, in part because Kirby attributed the drop to factors largely out of airlines' control.
He said demand has taken a hit as the strong U.S. dollar lowers foreign travelers' spending power and as economies such as Brazil have weakened. American's passenger unit revenue from Brazil fell 24 percent last quarter despite the carrier cutting capacity there by 20 percent to offset the drop.
The supply of flight seats has also outpaced demand in greater Dallas, American's hometown, with Southwest Airlines Co and other low-cost carriers expanding rapidly there.
Rivals Delta Air Lines Inc and United Continental Holdings Inc, which have smaller footprints in both Latin America and Dallas than American, expect passenger unit revenue to drop between 4.5 percent and 6.5 percent, and between 5 percent and 7 percent, respectively.
But American argued for optimism despite these trends.
"Change in (unit revenue) does not equal change in value," Chief Executive Doug Parker said on a call with investors.
American posted a 97 percent increase in profit from a year earlier to $1.7 billion in the latest quarter, earning more per share than analysts expected. Lower oil prices chopped $1.3 billion off American's fuel bill last quarter compared to the year prior.
The company also repurchased $750 million of its stock last quarter, and on Friday it announced an additional $2 billion stock buyback to be completed by the end of 2016.
"It certainly doesn't feel like the beginning of a continued decline in margins," Parker said. "If we thought that, we wouldn't be buying in $750 million of our equity at this price."
American forecast a pre-tax profit margin between 16 and 18 percent for the current quarter. It plans to grow its total capacity by 1 percent this year.
U.S. regulators are following airlines' capacity plans closely as it investigates whether several have colluded, although Parker said he was "confident" there would be no findings against American. (Reporting By Jeffrey Dastin in New York; Editing by Chizu Nomiyama and Bill Rigby)