There are problems at two of the nation’s top five airlines. Labor problems.
25.08.2023 - 14:15 / skift.com / Vasu Raja / Robert Isom / Justin Dawes / Devon May / Airlines
Despite a number of constraints in the aviation industry, American Airlines has achieved a full year of profitability for the first time since 2019.
The airline had a total revenue in 2022 of $49 billion, an increase of 7 percent over 2019, and a total net income of $803 million — all while flying 8.7 percent less capacity. And that is despite a $1.9 billion pretax loss in the first quarter.
It was also the best fourth quarter the company has ever had, with a total revenue of $13.2 billion, an increase of 16.6 percent from in 2019.
Airline executives shared the details during a quarterly earnings call Thursday morning.
“Key to our success has been sizing our airline for the resources we have available and the operating conditions we expect to encounter. And we will continue to do that going forward,” said American CEO Robert Isom.
Now, post-holiday bookings are the strongest they have ever been, said Robert Isom, CEO of American. Demand for domestic and short-haul international flights is leading that business, and international flights are expected to increase this year.
Even with the financial uptick, American is still working against multiple post-pandemic issues — including a workforce shortage, supplier constraints, and higher expenses — that will affect growth and operations over the next year.
American spent $13.8 billion on fuel and related taxes in 2022. It was $6.8 billion in 2021.
Total operating expenses were $47.4 billion in 2022, up from $30.9 billion in 2021.
The biggest cost right now is that the fleet is not being utilized at the level it should be, Isom said. That is being addressed in part by modernizing and simplifying feet, but there are other opportunities that can offset those costs, like airport rent, landing fees, and maintenance.
“The fleet’s meant to be flown. Those are the areas I would probably look to most as being opportunities for us to see much greater efficiency,” said Devon May, chief financial officer for American.
American is also experiencing upfront costs as it goes through a big hiring phase to replace retiring pilots and other workers.
The company is considering those multiple factors as it plans for the year.
“What is different from times past is we have been very conscious in Q1 about how we use the airline’s resources — it’s people, it’s planes, it’s facilities, everything — largely so that we can have as much of that capacity for the summer peak as possible,” said Vasu Raja, chief commercial officer for American.
Still, American is making progress in its effort to pay down $15 billion in debt by the end of 2025. The company has now reduced its total debt by $8.2 billion and expects to pay down another $3.3 billion this year.
American expects to
There are problems at two of the nation’s top five airlines. Labor problems.
The new contract will deliver more than $9 billion of compensation and quality-of-life benefits to American’s 15,000 pilots.
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