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Losses are mounting for America and the Southwest, but their prospects are better




South West (LCV) Thursday reported a quarterly loss, excluding special items. The loss was significantly smaller than a year ago, but slightly larger than Wall Street forecast.

Still, the company said it was profitable in June, its first profitable month of the pandemic. And he said based on his current booking trend, he expects to be profitable in the third and fourth quarters.

“The second quarter of 2021 marked a significant milestone in the pandemic recovery as demand for leisure travel increased,” said Southwest CEO Gary Kelly.

The earnings outlook is not as bright at American (AAL), the largest airline in the country. He announced a quarterly loss, excluding special items, which was lower than Wall Street forecasts. But he warned that its third quarter pre-tax margin, excluding special items, would again be negative.

Still, American said it stopped spending money in the second quarter and is now adding about $ 1 million in cash per day to its balance sheet. And he said revenue for the quarter almost doubled from the first quarter of this year. During the summer season, American expects to steal over 90% of its indoor seating capacity and 80% of its international seating capacity, compared to what it flew in the summer of 2019.

“There is a huge pent-up demand for travel,” US CEO Doug Parker said in an interview on CNBC. “The recovery is upon us, we are off to a good start.”

Business travel is still on the decline, as is international travel given the restrictions still in place on some international routes. But strong demand from domestic leisure travelers has helped to increase fares.

American has said it now plans to pay off $ 15 billion in debt by the end of 2025. The company has added $ 15.7 billion in additional long-term debt that it has incurred since the end of 2019. , just before the pandemic begins to produce results. With $ 37.2 billion in long-term debt on its books at the end of the quarter, American is the most indebted of all American airlines.

Its level of debt and forecasts of losses continuing through 2022 have made analysts more bearish on the outlook for its stocks than those of other airlines.
As Airlines Flirt With Profitability, Analysts Say It's Time For Investors To Get On Board

Both airlines reported net profit for the quarter, but that was due to a new round of financial aid from the federal government. Shares of both airlines were slightly lower in pre-market trading as a result of the reports.

Delta Airlines (OF) and United (UAL) previously said they expected to be profitable in the second half of this year also after another round of second quarter losses. United has just announced an order for 270 jets, the largest order in its history, and Delta has announced the purchase of used jets. And all airlines are hiring staff to handle the expected return of upcoming demand.




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