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US and Southwest Post Quarterly Profits on Travel Rebound, Federal Aid




July 21 (Reuters) – U.S. carriers American Airlines (AAL.O) and Southwest Airlines (LUV.N) posted quarterly profits on Thursday aided by a rebound in bookings and federal aid, and forecast improving revenue trends in the coming months as more and more people return to travel.

U.S. airlines, which received $ 54 billion in COVID-19 relief for workers’ wages and also took on debt to survive a deep industry crisis, are now deleveraging their balance sheets and rushing to secure a rebound.

“We are in the midst of an unprecedented recovery,” said US chief executive Doug Parker on an investor appeal where the company also outlined its intention to pay off around $ 15 billion in debt by the end of it. from 2025.

American, the world’s largest airline, said it had seen no drop in bookings linked to a recent surge in COVID-19 infection rates, echoing recent comments from Delta Air Lines (DAL.N) and United Airlines (UAL.O).

Domestic leisure travel has almost returned to 2019 levels, and American said it expects a full recovery in domestic business travel next year.

International travel, however, remains plagued by entry bans, though American has said every time restrictions are lifted there is a “rapid and dramatic increase in bookings.”

Revenues for American, the world’s largest airline, jumped 361% to $ 7.48 billion, beating expectations as it carried 44 million passengers, five times more than a year ago .

The rapid ramp-up posed operational challenges for both the Americans and the Southwest, which had to cancel flights due to labor shortages. The two have recalled pilots and flight attendants and are renewing their hiring plans.

Southwest Managing Director Gary Kelly said the company “is intensely focused on improving our operations as we restore our network to meet demand.”

Southwest’s total operating revenue, which is more focused on domestic travel, increased nearly 300% to $ 4 billion from the previous year, but fell about 32% from 2019.

More flights and higher fuel prices will weigh on the airline’s costs in the third quarter, he warned.

American, the world’s largest carrier, made a second-quarter profit of $ 19 million through June, including federal aid, compared to a loss of $ 2.07 billion a year earlier.

Southwest posted net income of $ 348 million, or $ 0.57 per share, including assists. Excluding items, Southwest’s net loss was larger than analysts expected, affecting equities.

However, both airlines said they were profitable in June even without federal funds, a first since the pandemic began in early 2020.

Alaska Air Group (ALK.N) on Thursday reported second-quarter earnings of $ 397 million, or $ 3.15 per share, including aid.

Reporting by Tracy Rucinski in Chicago and Sanjana Shivdas and Ankit Ajmera in Bengaluru; Editing by Nick Zieminski

Our standards: Thomson Reuters Trust Principles.




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