The three biggest US airlines enjoyed a boffo summer, reaping a combined profit of more than $2 billion as Americans jammed on to planes despite fares that were sharply higher than a year ago. What pandemic?
American Airlines said Thursday that it earned $483 million on record-breaking revenue that more than offset higher fuel costs in the third quarter. American predicted that profit will continue to exceed Wall Street expectations during the holiday-packed remainder of 2022.
The results from American, however, weren’t quite as grand as figures from its more prosperous rivals. United Airlines reported a $942 million profit on Tuesday, and Delta Air Lines posted third-quarter earnings of $695 million last week.
Clearly, many people are eager to travel after most were grounded during the early part of the pandemic. Executives at all three big US airlines said they see no indication that consumer concerns about inflation and the economy are hurting ticket sales.
“American’s third-quarter results, including our record revenue performance, are significant considering the macroeconomic uncertainty facing so many people,” CEO Robert Isom said on a call with analysts and reporters. “Demand remains strong.”
American, which is based in Fort Worth, Texas, predicted that fourth-quarter profit will be between 50 cents and 70 cents per share, which would beat Wall Street’s forecast of 19 cents per share.
US air travel has roared back from pandemic lows in early 2020. On Oct. 16, the Transportation Security Administration screened nearly 2.5 million travellers on a single day, the busiest day at the nation’s airports since February 2020.
Travel is booming despite a 43% leap in airfares in the past year, according to government figures.
One reason fares are high is that the number of flights has not returned to pre-pandemic levels, leaving consumers vying for fewer seats. American, for example, did nearly 10% less flying in the third quarter than in the same period of 2019.
American said it plans to run at 95% to 100% of 2019 levels next year. That is in line with Delta, which expects to restore its full schedule by next summer. United recently announced it will expand European flying next summer.
Isom said American could add more flights next year but will take a cautious approach. American, Delta, and others cancelled flights earlier this year when they didn’t have enough staff, particularly pilots.
“We are going to make sure that we don’t outpace what we have, either in terms of aircraft deliveries if that’s the constraint, or if it’s pilots at a regional level or our ability to train pilots” at American, he said.
For the third quarter, American said its adjusted profit, which excludes certain items, was 69 cents per share, compared with a forecast of 54 cents per share by analysts surveyed by FactSet.
Revenue rose to $13.46 billion, slightly higher than the $13.36 billion predicted by analysts. American, which has a major hub operation in Miami and operates many flights to the Caribbean, said it lost about $40 million in revenue because of hurricanes Fiona and Ian in September.