American Airlines’ predictions for a strong Q4 of FY2022 came true, as it produced a good final three months with an $803 million net profit for the December quarter. But the full-year profit of $127 million has been affected by the difficult start and high expenses. Of the US Big Three, American produced the lowest profit. American Airlines full-year profit is the lowest of the Big Three.
The December quarter produced record revenues of $13.189 billion compared to $9.427 billion in the same period of 2021, this despite operating at 6.1 percent lower capacity. Passenger revenues were $12.131 billion, up from $8.382 billion, while cargo revenues were down to $263 million from $341 million. With operating expenses of $11.806 billion (2021: $10.207 billion), the operating result was a positive $1.383 billion ($780 million). The $803 million net profit compares to $-931 million.
The full-year profit of $127 million is an improvement from the $-1.993 billion. But keep in mind that American’s Q1 produced a $-1.635 billion net loss, Q2 a $476 million profit, and Q3 a $930 million profit. “I am really pleased with three profitable quarters,” CEO Robert Isom said. Revenues were solid at $48.971 billion (2021: $29.882 billion), with passenger revenues at $44.568 billion ($26.063 billion) and cargo at $1.233 billion ($1.314 billion). American carried 199.3 million passengers at an 82.9 percent load factor.
American’s operating expenses were the highest of the Big Three and mounted to $47.364 billion ($30.941 billion), compared to $42.6 billion for United and $46.9 billion for Delta. Fuel costs doubled to $13.8 billion, but expenses for its regional airlines were also up to $4.1 billion from $2.9 billion. The operating result was $1.607 billion ($-1.059 billion).
Maintaining reliability
The focus has been and will be on maintaining reliable operations, which was a challenge during the December winter storm week. Yet, American claims it is number 1 in completion factor, although United said the same last week. The airline says it is adequately staffed after hiring 40.000 employees in the past two years. It intends to hire 2.000 new pilots this year, which should benefit its mainline operations but should also benefit its regional operations which have been reduced over the pandemic.
Another focus is reducing debt, which should be down by $15 billion in 2025. In the first eighteen months of the reduction program, $7.5 billion has been realized. In Q4, the airline repaid $539 million in debt and lease finance payments and a $1.2 billion term loan. Total liquidity stood at $12 billion by the end of December, including cash and undrawn facilities.
Fleet renewal will be rather modest in 2023, with just 23 new aircraft expected. The fleet plan includes only one Airbus A321neo this year but 58 through 2027, nineteen Boeing MAX this and 69 through 2027, plus four 787s and thirty between 2024 and 2027 and beyond, or 181 in total.
