American Airlines increased its revenue prediction for the second quarter of 2022 Friday as the travel sector bounces back from the epidemic. The world’s largest airline is the latest to announce that it anticipates demand this summer will exceed previous forecasts.
Initial revenue growth expectations for Q2 ranged between 6–8% over 2019’s results, but the airline now expects its bottom line to rise 11–13% instead.
Although shares of the Fort Worth-based company dropped more than 8% in midday trading Friday, on Tuesday morning, June 7, shares of the Fort Worth-based company had risen slightly to $16.38.
Domestic passenger counts nationwide are rising, approaching pre-pandemic levels. The lifting of travel restrictions has bolstered business travel and the airline industry.
In response to this increasing demand, American added 12,000 more team members than it had in 2021 to support the operation during 2022’s busy summer months.
Steadily rising revenue has enabled American to return to profitability. The airline’s Q1 2022 revenues of $8.9 billion led the industry, reflecting record sales in March.
It was the first month since the pandemic began that the airline’s total revenue exceeded 2019 levels. If revenue continues to exceed expectations, the company should be well-positioned to meet its goal of paying down about $15 billion of debt by the end of 2025.
Rival airlines such as Delta, Southwest, and JetBlue also report increased revenues for Q2.
Airlines operate fewer flights than they did in 2019, allowing them to charge higher airfares. This summer, airfares are expected to increase nearly 50% higher than this time last year, according to banking firm Cowen.
Such revenue is “offsetting some real cost pressures,” American Airlines CEO Robert Isom assured investors at a conference recently. American expects revenue per seat to increase by up to 22% compared to 2019, a significant improvement over their previous prediction of 14–16%.
