American Airlines says it had a tough first quarter, with another big loss, but it expects a profit in the second quarter as more people return to travel
American Airlines is the latest carrier to give an optimistic outlook for the rest of 2022. American said Thursday that although it lost $1.64 billion in the first quarter, sales hit a record high in March and the company s expects to make a profit in the second quarter. .
“The demand is as strong as we’ve ever seen,” US CEO Robert Isom told analysts.
American’s bullish view echoed similar comments from Delta Air Lines and United Airlines, both of which in recent days predicted they will turn in full-year profits despite heavy first-quarter losses. .
Air travel was moderated in January and February by the omicron variant which caused an increase in COVID-19 cases among travelers and airline workers. But travelers returned in March and airline executives believe Americans are eager to travel this summer and won’t be deterred by another smaller rise in coronavirus cases and higher airfares.
The recovery is fueled by leisure travelers, but airlines say they are seeing more business travellers.
American said overall business travel was 80% of pre-pandemic levels, driven by corporate travel, which is only 50% of 2019 levels. Isom said, however, that corporate bookings are the highest since the start of the pandemic, “and we expect this to continue as more businesses reopen their offices.”
Along with 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%.
Airlines also face a limited number of pilots, which could limit their ability to operate as many flights as they want.
“The pilot shortage for the industry is real, and most airlines simply won’t be able to meet their capacity plans because there simply aren’t enough pilots, at least not for the five coming years and beyond,” United CEO Scott Kirby said. told analysts on Thursday.
American said it has hired 1,100 pilots since the start of last year. Many of them came from smaller regional airlines, leaving these carriers with shortages. As a result, American will scale back its American Eagle program in the second quarter.
American’s passenger capacity will also be lower than expected as deliveries of new Boeing 787s have been delayed by production issues at Boeing factories.
American reported a bigger first-quarter loss than a year ago, when it lost $1.25 billion. The Fort Worth, Texas-based airline 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 survey by Zacks Investment Research. Revenue reached $8.9 billion.
Alaska Air Group, the parent company of Alaska Airlines, said Thursday it lost $143 million in the first quarter, down from $131 million a year earlier. Revenue more than doubled to $1.68 billion, but was down 10% from the same quarter in 2019.
The Seattle-based carrier expects second-quarter revenue to be 5-8% higher than the same quarter of 2019.
After the market closed on Thursday, United Airlines Holdings reported a first-quarter loss of $1.38 billion on Wednesday, but said it expects a return to profitability in the April quarter at June. Revenue of $7.67 billion was up from a year ago but down 21% from the start of 2019 as the airline continues to operate fewer flights than before the pandemic.
In morning trading, shares of United gained 12%, American 6%, Delta Air Lines 5% and Alaska 2%.