Competitors Edge Ahead of Southwest


American Airlines is one of the competitors that has capitalized off the Southwest holiday meltdown. | Image by Alfred GF/Pexels

Southwest Airlines’ holiday meltdown has inspired rival American Airlines to capitalize off the fiasco.

American Airlines CEO Robert Isom said the Fort Worth-based carrier is “doubling down on our efforts to run a reliable operation in 2023, including investing in our team, our fleet, and technology to support our operations” during the company’s fourth-quarter earnings call last week.

The statement comes as Southwest has blamed its outdated infrastructure for the holiday cancellations.

American Airlines reported a full-year profit of $127 million, its first profitable year since 2019, according to The Dallas Morning News.

The company also posted record revenues in the fourth quarter. Additionally, it said the post-holiday season has been strong thus far.

“This is our best environment ever post-holiday booking period with broad strength across all entities and travel periods,” Isom said on the earnings call.

“Demand for domestic and short-haul international travel continues to lead the way. We expect a strong demand environment to continue in 2023 and anticipate further improvements in demand for long-haul international travel this year,” he said.

Meanwhile, Southwest reported a fourth-quarter loss and is expected to report a loss in the new first quarter because of fewer bookings in January and February.

“We are starting off the first quarter with a $300 million to $350 million headwind, which we assume is attributable to the operational disruptions in December,” Southwest CEO Bob Jordan said recently.

American Airlines also spoke about investments it had made.

“We spent a tremendous amount of time investing in technology to make sure that we can identify where our crews and our planes and our maintenance requirements are,” Isom said.

Southwest previously sent a letter to customers claiming it would invest up to $1 billion in its technology infrastructure. The company now plans to up that figure to $1.3 billion, according to CFO Dive.

At the same time, American Airlines expects to expand its first quarter by 10% year-over-year and by 8% for the entire year. The airline reported a 64% year-over-year profit in 2022. United and Delta airlines also reported year-end profits, according to The Dallas Morning News.

Southwest is now under investigation by the U.S. Department of Transportation, with the regulatory body questioning if Southwest’s holiday cancellations were due to over-scheduled flights.

American Airlines said it had been preparing for weather events like the one last month, according to American Airlines chief operating officer David Seymour.

“We have to stay in front of (these events),” Seymour said. “But more importantly is the recovery. We started looking at the forward look of what the storm potentially could be and started building our recovery plan before the storm hit.”

United Airlines CEO Scott Kirby also said the company was more prepared this year due to problems the company faced in 2021.

“We had our own challenges over a year ago during Christmas of ’21,” said Kirby on United’s fourth-quarter earnings call. “Omicron hit us all hard, but it also shone a spotlight on other strains in the system. We responded by proactively pulling down capacity. It was the only choice. You can’t change the engines on an airplane when it’s flying.”

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