Despite concerns about a recession, people still want to spend on travel.
That’s a big draw from the US airline industry’s fourth-quarter earnings season, where the nation’s last major airline reported its results last week.
American Airlines is the latest company to say it has earned record revenue as demand continues to soar since the outbreak of the pandemic. This trend seems to show little sign of slowing down – for now.
The latest results come on Thursday when the four major airlines report earnings for the fourth quarter of 2022.
Americans made a net income of $803 million, easily beating Wall Street expectations on Thursday when it said it earned record revenue in the fourth quarter. The Fort Worth-based carrier said it made 16.6% more in the quarter compared with the same period in 2019, despite flying at 6.1% lower capacity.
American Airlines CEO Robert Isom said: “This is our best-ever post-holiday booking period with strength across all entities and travel times. ,” American Airlines CEO Robert Isom said on the company’s quarterly earnings call. “Demand for domestic and international short-haul travel continues to lead. We expect a strong demand environment to continue into 2023 and anticipate further improvement in international long-haul travel demand this year.”
U.S. fourth quarter results mirror those of competitors, Delta Airlines and unified airlineeach company also reported record profits and a promising 2023 forecast.
Another major Dallas-Fort Worth area carrier, Southwest Airlinesno such rosy income.
Southwest said it expects demand to rebound from the holiday downturn. However, it reported a loss for the fourth quarter of $220 million. Much of the carrier’s income is concentrated in the catastrophic crisis that occurred around Christmas and crashed into the New Year. The executives repeatedly apologized for the operational failure.
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“First and foremost, I would like to once again apologize to our customers and employees for the impact the disruption has had on them and their holiday plans,” said CEO. Southwest executive, Bob Jordan said on the call. “We are very focused on reducing the risk of a repeat of that type of active event.”
The episode made the airline to cancel nearly 17,000 flights, costing about 390 million USD in operating costs. According to Tammy Romo, Southwest’s chief financial officer, most of those costs go toward reimbursing customers. Jordan said the airline is close to completing about 95% of those refund requests.
Transportation facilities also debuted an investigation into the Southwest Crisis to see if the airline’s schedule was unrealistic. Southwest said it is cooperating with the DOT in the investigation.
Jordan added that 25% of customers who received 25,000 quick bonus points for failure booked a future trip with the airline. Some points are used and others are set for cash.
“I take it as a sign of confidence that the customer understands that we did something wrong there,” Jordan said on the call. “We did everything we could to get it right.”
Still, Southwest is still reeling from the holiday mayhem as executives say bookings fell in January. Southwest CCO Ryan Green said the slowdown in bookings only occurred in January and the first half of February, as part of a “hangover” effect from the incident.
Alaska Airlines and JetBlue — the other two major carriers that report quarterly earnings on Thursday — also said demand trends for 2023 were promising. Both companies beat analysts’ forecasts.
Strong demand from leisure travelers seems to be driving this trend. After the pandemic, leisure travel has returned much faster than business travel.
“Looking further ahead, we’re excited to continue building on last year’s record performance as we expect another year of strong revenue growth ahead, underpinned by demand for solutions. strong mind as well as numerous commercial and networking initiatives,” shared JetBlue COO Joanna Geraghty.
It’s good for the airlines that the public continues to want to travel. It is likely to drive higher fares as travelers continue to book flights.
That’s not to say there aren’t some dark clouds on the horizon for the industry.
One pilot shortage has squeezed the industry – particularly at regional carriers, which have responded by raising wages and labor costs. Supply chain issues has slowed down providing everything from new aircraft to spare parts.
In addition, new concerns about outdated aviation infrastructure due to recent The collapse of the federal aviation management system there are some airlines that are wary of even more disruption.
United’s chief executive, Scott Kirby, made headlines last week when he said that airlines are unlikely to operate like they did in 2019, due to the stresses that have affected the industry since the pandemic.
Many airlines have recently returned to full staff after many employees retired or acquired during the pandemic. There has been months of speculation among financial forecasters about the possibility of a recession in the US – something that could derail the industry’s recovery.
For now, however, airlines remain relatively optimistic about 2023.
JetBlue CEO Robin Hayes said: “We’ve overcome many challenges together over the past year, and we’ve made tremendous progress in recovering our business from the pandemic. “And we are poised to build on that success in 2023 here, with a disciplined plan to further strengthen our foundation, both operationally and financially.”
