Airline titans reported a challenging financial quarter despite steady demand from customers.
Delta Airlines and Southwest Airlines reported a net loss in the first quarter of 2023, while American Airlines managed to make a small profit, the latest earnings reports from the industry giants show. Despite financial hiccups during Q1, executives for each airline forecast stronger financials in the second quarter due to increased travel demand over the summer.
Customers may be pulling back in some areas due to challenging economic conditions. Still, any such pullback is not reflected in Delta’s bookings or credit card data, said Delta CEO Ed Bastian during the company’s earnings call. Instead, he claims consumers have prioritized air travel despite inflation worries, layoffs, and high-interest rates.
Even though Delta’s operating cash flow and revenue aligned with expectations, the Atlanta, Georgia-based airline still managed to report a $363 million net loss during the quarter, partly driven by costs associated with a new pilot contract, financial results show.
“For the June quarter, we expect to deliver record revenue and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25,” Bastian said in the report. Regarding full-year guidance, Delta Airlines forecasts “revenue growth of 15% to 20% year over year, earnings of $5 to $6 per share, and free cash flow of over $2 billion.”
Southwest was another airline to experience a negative financial impact during the first quarter of 2023. As expected, Southwest’s winter storm meltdown resulted in a first-quarter financial loss of $159 million, or $0.27 per diluted share, the company’s financial report showed. According to company financials, this was largely the result of cancellations and a deceleration in bookings.
“As expected, we incurred a first quarter 2023 net loss that resulted from the negative financial impact of approximately $380 million pre-tax, or $294 million after-tax, related to the December 2022 operational disruption,” said Bob Jordan, Southwest Airlines president and CEO.
Even though Southwest walked away with more than a $150 million net loss, the Dallas-based airline reported strong first-quarter operating revenues of $5.7 billion, a 21.6% increase year-over-year.
“While we are mindful of the uncertain economic environment, demand for domestic air travel remains strong, thus far,” Jordan said in the report. “Our goal remains to manage inflationary cost increases and maintain our competitive cost advantage.”
American Airlines was the industry leader during the first quarter, reporting a net income of $10 million, or $0.02 per diluted share, a revenue of $12.2 billion, representing a 37% increase year over year, and an operating cash flow of $3.3 billion, with record free cash flow of $3 billion, according to the Fort Worth-based carrier’s latest financial results.
“The American Airlines team ran a great operation and delivered on our financial guidance for the quarter, resulting in a first-quarter profit for the first time in four years,” said American CEO Robert Isom in the Q1 report.
“Looking ahead to the remainder of 2023, we remain focused on reliability, profitability, strengthening the balance sheet, and creating even more value for our shareholders, team members, customers, and the communities we serve.”
The Dallas Express reached out to the media relations team at American Airlines for comment about the company’s performance among its competitors but was directed to commentary found in the company’s first-quarter earnings call with analysts.