American Airlines lost $1.64 billion in the first quarter, a bigger loss than a year ago, but said Thursday it expects to turn profitable in the spring as travel demand strengthens .
Shares of the airline climbed 5.7% to 20.59 in midday trading.
Air travel was moderated earlier this year by the omicron variant which caused a surge in COVID-19 cases, but passengers returned in March, and American said it made a profit that month, excluding certain items.
Revenue more than doubled from a year earlier, returning to 84% of pre-pandemic levels since early 2019.
“Demand is very strong and as a result we expect to be profitable in the second quarter based on our current fuel price assumptions,” new CEO Robert Isom said in a statement from the airline. Fort Worth, TX.
The airline said it was benefiting from the easing of pandemic travel restrictions and improved business travel, which has been a weak spot for airlines. American said corporate bookings were the highest since the pandemic began.
However, alongside higher revenues, airlines face higher fuel and labor costs. American’s fuel bill more than doubled from a year earlier and labor costs increased by more than 15%.
American’s upbeat commentary on the remainder of 2022 echoed comments from Delta Air Lines and United Airlines, both of which predicted full-year profits as travel continues to rebound from the depths of the pandemic.
The first quarter, however, was less rosy. It all started with massive flight cancellations due to winter storms and high numbers of pilots and flight attendants with omicron. Cancellations declined and revenue increased for the remainder of the quarter as the variant declined.
American said that excluding special items, it lost $2.32 per share, slightly better than the average forecast for an adjusted loss of $2.43 per share, according to a Zacks Investment Research survey of of eight analysts.
Still, the loss was larger than the US$1.25 billion loss a year earlier.
Revenue reached $8.9 billion.
Through Wednesday, shares of American Airlines Group had gained 8.5% year-to-date. The stock has fallen just over 4% in the past 12 months.
New York Post