American Airlines and Southwest Airlines reported second-quarter profits on Thursday, benefiting from federal aid and increased travel demand.
The Fort Worth, Texas-based American reported net income of $ 19 million, breaking five straight quarters of losses, in part thanks to more than $ 1 billion in federal wage support. Revenue for the three months ended June 30 was $ 7.48 billion, down from just $ 1.6 billion a year earlier and ahead of Wall Street analysts’ forecast, so that customers have returned to the sky in droves.
After adjusting for one-time items, American recorded a loss of $ 1.1 billion or $ 1.69 in share.
American has announced plans to repay $ 15 billion in debt by 2025. America’s most indebted of airlines, American had a total debt of about $ 48 billion at the end of the first quarter, according to FactSet.
An American Airlines Boeing 777-300ER takes off from Sydney Airport in Sydney, Australia on October 28, 2020.
Loren Elliott | Reuters
Earlier Thursday, Southwest reported an increase in revenue in the quarter as travelers returned. Sales of the Dallas-based airline rose nearly 300% from the previous year to $ 4 billion. It was still down 32% from $ 5.9 billion in the same period in 2019. Second-quarter net income totaled $ 348 million, compared to a loss of $ 915 million a year earlier .
The carrier recently faced hundreds of cancellations and delays during the quarter due to bad weather, technology issues and staff shortages. During the week of July 4, he offered flight attendants and other staff double pay for taking extra shifts.
“While the rapid surge in travel demand in June stabilized our financial situation, it impacted our operations after an extended period of depressed demand due to the pandemic,” CEO Gary Kelly said in the results release. “Therefore, we are intensely focused on improving our operations as we restore our network to meet demand.”
Southwest said rising fuel prices and increased flights will drive up costs this third quarter.
American Airlines also faced staff shortages this summer and cut its schedule for the first half of July by about 1%. Airlines have been pushing to get their employees, from flight attendants to customer service agents back to work to keep up with rising demand. The carriers had begged staff last year to take unpaid or partially paid leave or early retirement in order to reduce their labor costs.
U.S. airlines recently either resumed hiring pilots and other employees or announced plans to do so.
Southwestern stocks fell more than 2% in pre-market trading, while US stocks lost more than 1%.