The Chronicle Herald (Provincial)
American, Southwest post quarterly profits on travel rebound, federal aid
U.S. carriers American Airlines and Southwest Airlines on Thursday posted quarterly profits helped by a bookings rebound and federal aid, and forecast improving revenue trends in the months ahead as more people return to travel.
U.S. airlines, which received $54-billion in COVID19 relief for workers' salaries, and also took on debt to survive a deep industry crisis, are now deleveraging balance sheets and rushing to service a rebound.
"We are in the midst of an unprecedented recovery," American Chief Executive Doug Parker said on an investor call where the company also outlined plans to pay down about $15-billion of debt by the end of 2025.
American, the world's largest airline, said it has not seen any decline in booking related to a recent uptick in COVID19 infection rates, echoing recent comments by Delta Air Lines and United Airlines.
Domestic leisure travel has nearly recouped 2019 levels, and American said it sees domestic business travel fully recovering next year.
International travel, however, remains beset by entry bans, though American said that whenever restrictions are lifted, there is a "quick and dramatic increase in bookings."
Revenues at American, the world's largest airline, jumped 361 per cent to $7.48 billion, beating forecasts, as it carried 44 million passengers, five times more than a year ago. The quick ramp-up has posed operations headaches for both American and Southwest, which had to cancel flights due to labour shortages. Both have recalled pilots and flight attendants and are renewing hiring plans.
Southwest Chief Executive Gary Kelly said the company is "intensely focused on improving our operations as we restore our network to meet demand."
Total operating revenue at Southwest, which is more focused on domestic travel, rose nearly 300 per cent to $4-billion from a year earlier but fell about 32 per cent from 2019.
More flying and higher fuel prices will weigh on the airline's costs in the third quarter, it warned.
American, the world's largest carrier, turned a $19-million profit for the second quarter to June, including federal aid, compared with a loss of $2.07-billion a year earlier.
Southwest posted net income of $348-million, or $0.57 per share, also including aid. Excluding items, Southwest's net loss was larger than analysts had forecast, hitting shares.
However, both airlines said they were profitable in the month of June even without federal funds, a first since the pandemic began in early 2020.
Alaska Air Group on Thursday reported a $397-million profit, or $3.15 per share, in the second quarter, including aid.