What a difference a year makes.
Last year, several major airlines beset by travel restrictions were operating at a loss.
Fort Worth-based American Airlines posted a first-quarter loss of $1.64 billion in March 2022.
Fast forward to the fourth quarter, and American Airlines reported record revenues of $13.2 billion and a net income of $803 million.
“Notably, we achieved this record revenue while flying 6.1% less capacity than we did in the fourth quarter of 2019,” American Airlines CEO Robert Isom said on the fourth quarter earnings call in January.
Domestic airline operators United Airlines and Delta Airlines also experienced a similar turnaround.
On the International front, British Airways owner International Consolidated Airlines Group posted on Friday its first profitable year since the onset of the pandemic, according to The Wall Street Journal.
Australian-based Qantas also reported record pretax earnings in the last six months.
“This is a huge turnaround considering the massive losses we were facing just 12 months ago,” Qantas CEO Alan Joyce said, according to the WSJ.
“While interest rates and inflation are expected to hit discretionary spending at some point, we’re yet to see any signs of that in our bookings. In fact, the research shows travel is one area that people want to prioritise over the next 12 months,” Joyce said in a letter to shareholders.
One element driving airlines’ recent turnaround is consumers’ apparent willingness to pay more for airfares.
A Bank of America Institute report found that spending on airlines and travel agencies increased 60% year-over-year in 2022.
The consumer price index for plane tickets increased 25% over the last year, the most significant increase since the Federal Reserve of St. Louis began tracking airfares in 1989, according to CNBC.
A lack of parts and delays in deliveries of new aircraft from Airbus and Boeing have also driven up prices, according to the WSJ.
“There hasn’t been enough capacity to fill the demand,” said Cameron McDonald, a transportation analyst at Australian-based investment firm E&P, per the WSJ.
“The only way that demand has been able to be controlled is through pricing, and you see very, very high airfares versus historic trends.”
The surge in travel demand has airlines moving quickly to hire employees.
Dallas-based Southwest Airlines CEO Bob Jordan said his company is looking to hire 7,000 new employees in 2023, as previously reported by The Dallas Express.