DALLAS (AP), – The U.S. airlines claim they are at a turning point after a poor first quarter. They expect to be profitable when Americans travel again in record numbers, which will likely happen as a result of the outbreak of the plague.
American Airlines is the only airline that has given a positive forecast for 2022. American Airlines stated on Thursday that it had lost $ 1.64 Billion in its first quarter. However, the company’s March peak sales were significant and it expects to turn a profit in its second quarter.
Robert Izum, U.S. CEO, stated that demand is stronger than ever before.
American’s optimistic outlook was similar to those of Delta Air Lines (and United Airlines) who both predict full-year profits, despite huge losses in the quarter.
Omicron caused an increase of COVID-19 cases in both passengers and employees, which subdued air travel in February and January. However, travelers are returning in March and executives at airlines believe that Americans are keen to travel this summer and will not be deterred by a smaller increase in Corona cases or higher airfares.
Industry sources attribute the increase in flight prices to higher fuel costs, limited flights compared with pre-epidemic times and strong demand.
Vaso Raja (America’s chief trade officer) stated, “We encourage that indeed, from month to month, we are seeing a greater increase in tariffs.” “We see a lot more power in tariff environments.”
While leisure travelers are driving the recovery, airlines claim they are seeing more business travellers.
American stated that total business travel was 80% of pre-epidemic levels. This is due to corporate travel, which is only half of 2019. Izum stated that corporate travel is at 50% of 2019 and total business travel is now at 80% of pre-epidemic levels.
However, with increased revenues comes higher fuel costs and higher labor costs. American’s fuel bill has more than doubled over a year ago, and wages have risen more than 15%.
As a result of manpower shortages, thousands of flights were canceled last summer. Airlines have struggled to recover their travel formation. Now, in the face a much bigger boom – the number people passing through U.S. airport checkpoints has risen by more than 50% to 2.1million a day in April from a year earlier – it isn’t clear whether airlines have done enough to avoid even greater disruptions this Summer.
The shortage of pilots will pose a major problem, which could limit airlines’ ability to fly as many flights as they wish.
“The industry’s pilot shortage is real and most airlines won’t be able realize their capacity plans because they simply don’t have enough pilots,” Scott Kirby, United chief executive, told analysts on Thursday.
American claimed that 1,100 pilots have been hired since last year. Many of them were from regional airlines. This left many airlines without enough pilots. American Eagle will be reducing its schedule for the second quarter.
American’s passenger capacity may also fall as new Boeing 787s are delayed at Boeing plants due to manufacturing problems.
Izum indicated that America would adapt its schedule to meet the needs of the pilots and aircraft available. He claimed that U.S. officials have “tremendous confidence” in the airline’s smooth operation over the summer.
American posted a $ 1.25 Billion loss in its first quarter, a bigger loss than the previous year. Fort Worth, Texas said it lost $ 2.32 per shares without special items. This was slightly more than the $ 2.43 average adjusted loss per share according Zacks Research Investments. Revenue reached $ 8.9 billion.
Alaska Air Group, mother of Alaska Airlines, reported Thursday that it had lost $ 143 Million in the first quarter compared with a loss $ 131 million one year ago. The revenue increased more than twice to $ 1.68 Billion, but it fell 10% from the previous quarter in 2019.
Seattle Airlines expects second quarter revenue to be 5% to 88% more than the same quarter in 2019.
United Airlines Holdings of Chicago announced a $ 1.38 Billion loss for the first quarter of the year on Wednesday. However, it said that it expects profitability to resume in the April to Juni quarter. While revenues have increased by $ 7.67 billion over the past year, they have decreased by 21% in the first quarter of 2019. The airline continues to operate fewer flight than before the outbreak.
United shares rose 9% by the closing bell. American shares rose 4%. Delta Airlines gained 3%. Alaska’s share price changed only slightly.