American Airlines and Southwest Airlines posted second-quarter gains on Thursday as they were boosted by federal aid and a surge in travel demand.
The Fort Worth, Texas-based American reported net income of $ 19 million and recorded five consecutive quarters in losses, thanks in part to more than $ 1 billion in state payroll. Revenue for the three months ended June 30 was $ 7.48 billion, down from just $ 1.6 billion a year earlier and above forecast Wall Street analysts as customers flocked to the sky returned.
After adjusting for one-time effects, American posted a loss of $ 1.1 billion, or $ 1.69 as a share.
American plans to run $ 15 billion in debt by 2025. According to FactSet, the most heavily indebted of the US airlines had a total debt of about 48 billion US dollars at the end of the first quarter.
An American Airlines Boeing 777-300ER takes off from Sydney Airport in Sydney, Australia on October 28, 2020.
Loren Elliott | Reuters
Early Thursday, Southwest reported a jump in sales for the quarter as travelers returned. Revenue for the Dallas-based airline rose nearly 300% year over year to $ 4 billion. That was still 32% less than $ 5.9 billion for the same period in 2019. Net income for the second quarter was $ 348 million, compared to a loss of $ 915 million a year earlier.
The airline recently faced hundreds of cancellations and delays during the quarter due to bad weather, technology issues and staff shortages. During the week of July 4th, it offered double pay to flight attendants and other employees to take on extra shifts.
“While the rapid increase in travel demand in June gave stability to our financial position, it has impacted our operations after a prolonged period of weak demand due to the pandemic,” said CEO Gary Kelly in the earnings release. “That’s why we’re focusing so much on improving our operations while we restore our network to meet demand.”
Southwest said higher fuel prices and an increase in air traffic will drive costs up in the third quarter.
American Airlines also struggled with staff shortages this summer and cut its flight schedule for the first half of July by around 1%. Airlines have struggled to get employees, from flight attendants to customer service reps, back to work to cope with the surge in demand. The airlines had asked their employees last year to take unpaid or partially paid vacation or to take early retirement in order to reduce their labor costs.
U.S. airlines recently resumed or announced they would recruit pilots and other staff.
Southwest stocks lost more than 2% in early trading, while American stocks lost more than 1%.