American Airlines forecasts third-quarter profit, but cuts growth after flight disruptions

American Airlines posted its first quarterly profit since the Covid pandemic began without government help, but joined competitors in cutting growth plans after a series of disruptions this year. However, the airline on Thursday forecast a third-quarter profit, another sign of strong demand for travel, even at high prices.

American posted a $476 million profit in the second quarter, up from $19 million a year earlier, though the airline was still benefiting from federal coronavirus payroll support last year.

Second-quarter revenue of $13.4 billion was up 12% before the pandemic, despite American flying 8.5% less than the same period in 2019, the airline said.

American has been more aggressive than rivals United Airlines and Delta Air Lines in restoring capacity, but American’s CEO said the airline would limit its expansion this year.

“As we look ahead to the rest of the year, we have taken proactive steps to build an additional reserve into our schedule and will continue to limit capacity to the resources we have and the operating conditions we face,” CEO Robert Isom said in a note to staff.

The airline said it would fly 8% to 10% below 2019 levels in the third quarter, but said revenue would rise as much as 12% from the previous three years as high fares continue to summer.

Shares of American fell more than 8% in afternoon trading, while United fell more than 10%.

Here’s how the trader performed in the second quarter, compared to Wall Street expectations based on Refinitiv consensus estimates:

  • Adjusted earnings per share: 76 cents vs. 76 cents expected.
  • Total income: $13.42 billion vs. $13.40 billion expected.
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Unit costs rose 45% in the second quarter from 2021 as the airline, like its rivals, faced rising fuel and other expenses.

Alaska Airlines posted net income of $139 million on record revenue of nearly $2.7 billion when it reported its own second-quarter results on Thursday. He also said he would be cautious about building capacity.

“As is the case throughout the economy, supply chains continue to be disrupted by the pandemic,” Chief Executive Officer Ben Minicucci said on an earnings call after the report. “We are working with key partners more closely than ever and will be more conservative in our operation and capacity planning until we see higher levels of stability and predictability.”

For the third quarter, Alaska plans to fly a schedule between 5% and 8% compared to the same period in 2019 and expects revenue to increase as much as 19% from the previous three years.

United on Wednesday night reported its first profit since the pandemic without government help, but said it would scale back growth plans through 2023.

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