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American Airlines Announces First Quarterly Profit Without Federal Funds

Business

American Airlines plane on ramp | Image by Shutterstock

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American Airlines recorded a revenue of 13.4 billion and a net income of $476 million from summer travelers in the year’s second quarter.

This record marks American’s first quarterly profit without government aid since the beginning of COVID-19. It beats last year’s record by $19 million. The $13.4 billion revenue is also a record for any quarter in the company’s history.

American Airlines CEO Robert Isom said the demand for corporate travel, which previously slowed down, has improved, even though it remained down 20% to 25% from its level in 2019.

The airline also recorded an increase in leisure travelers. Now that the U.S. government no longer requires a negative COVID-19 test for people flying into the country, it expects a continuous soar in its improved international bookings. Isom said the airline’s revenue from leisure travelers was more than in 2019.

American’s record for on-time flights and cancellations also improved in this second quarter, compared with the same period in 2019.

“The American Airlines team has stepped up to meet the surge in demand for air travel while running a reliable operation in very challenging conditions,” Isom said. “We are encouraged by the trends we’re seeing across the business, and we remain well-positioned for the continued recovery.”

The Fort Worth-based airline said it is ending the second quarter with $15.6 billion in total available liquidity and expects the year’s third quarter to yield profitable returns. But, like many competitors, it scaled back its growth plans due to the disruptions it struggled with this year.

Airlines have struggled with flight delays and cancellations this summer, citing bad weather and understaffing of federal air traffic controllers.

However, a shortage of airline workers is also part of the problem. Airlines had laid off many employees after the pandemic negatively affected business in 2020.

In June, American canceled 4,900 flights and rescheduled flights more than any other major U.S. airline.

In light of the disruptions, airlines have been working to rebuild their schedules and return to pre-pandemic operations.

According to Isom, American has hired 20,000 new employees to cover the staff reduction. New positions have also been added to the company.

Despite the improvements the airline has seen, inflation and the economy remain a problem for airlines. As revenue from travelers rises, operating costs, especially fuel, are also increasing. Unit costs in the second quarter increased by 45% compared to 2021. Hence, Isom said its expansion this year would be limited as it plans to trim scheduled flights for smoother operation.

In a note to staff, he said the company has “taken proactive steps to build additional buffer into our schedule and will continue to limit capacity to the resources we have and the operating conditions we face.”

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