Saturday, December 10, 2022

America and the Southwest are profitable as the aviation industry recovers.

America and the Southwest are profitable as the aviation industry recovers.

American Airlines and Southwest Airlines reported profit for the three months ended September, reflecting the industry’s recovery despite the spread of the Delta variant coronavirus. But the airlines aren’t entirely out of the woods: both would have reported losses if it hadn’t been for federal aid over the pandemic.

Nonetheless, financial results show the industry is on the mend as travel steadily resumes, and both the Americans and the Southwest said they expect more growth in the last three months of the year, fueled by corporate, international and holiday travel.

“We have made significant strides in recovering from the pandemic in the third quarter of 2021, and I expect more in the fourth quarter,” Southwest CEO Gary Kelly said in a statement. “I am very pleased with the recovery in demand and our prospects for 2022.”

Southwest reported third-quarter profit of $ 446 million on revenue of $ 4.7 billion. The Delta option robbed the airline roughly $ 300 million in revenue over the summer, but Southwest also suffered from operational problems, including a three-day period of widespread flight delays and cancellations in June, which were repeated earlier this month.

“The staffing available was below target and, among other factors, resulted in us not meeting our operational timeliness targets,” acknowledged Mr. Kelly. As a result, the airline has revised plans for 2022, as it expects to hire 5,000 people by the end of this year. Mr. Kelly said Southwest is more than halfway there.

Ticket sales have begun to improve in recent weeks, but the Delta option and operational issues will put pressure on Southwest’s fourth-quarter results. The airline said the virus cost it roughly $ 40 million this month, while the one-day leg of interrupted flights ending last week will cost it $ 75 million. However, the rest of the quarter looks good as holiday ticket sales trends line up with 2019 trends.

American, which reported $ 169 million in revenue from federal aid, also said it expects significant holiday demand, which the airline expects to help it end the fourth quarter with roughly 80% revenue and nearly 90% sales space, compared with last year. last three months of 2019.

During the third quarter, American received nearly $ 1 billion in federal aid to help pay employee salaries, and Southwest received $ 763 million.

Both airlines said they are optimistic about a recovery in corporate travel and an increase in international travel, as US travel restrictions are expected to ease early next month. Delta and United, which recently reported earnings for the same quarter, also expressed optimism for the months ahead, although higher fuel prices could impact those improvements.

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