Both American Airlines and United Airlines returned to profitability in the second quarter, their first profits since the start of the pandemic. This was thanks to the fact that the two major US carriers had their best Q2 profits ever, they announced this week. American and United report strongest Q2 ever.
United’s Q2 $329 million net profit compares to $-434 million in 2021. The operating profit was $878 million versus $-270 million last year. Total revenues more than doubled to $12.1 billion from $5.5 billion, of which $10.8 is from passengers and (2021: $4.4 billion) and $574 million from cargo ($606 million). Total revenues per available seat mile (TRASM) were up a record 24 percent. But the same happened to United’s expenses, with fuel costs up by more than three times to $3.8 billion from $1.2 billion. A gallon of fuel costs the carrier on average $4.18.
Looking at United’s HY1, the airline was still in the red with a $-1.048 billion net loss versus $-1.791 billion in 2021. The operating loss was $-498 million compared to $1.651 billion. Revenues grew to $19.7 billion from $8.7 billion, of which $11.2 billion from passengers ($6.7 billion) and cargo did a little better over the six months-period to $1.2 billion from $1.1 billion.
United anticipates that the economy will slow down in the near to medium term, but these headwinds are more than offset by the recovery of air traffic since the pandemic. It expects earnings to accelerate in Q3 and return to profitability for the full year, in line with the full-year guidance made in April. Its adjusted pre-tax margin should be at nine percent next year, in line with its target to fourteen percent in 2026. The airline had $22 billion in liquidity by the end of June.
American
American reported a $476 million Q2 profit on July 21 compared to $19 million last year. The operating profit was $1.017 billion, up from $441 million. Total revenues increased to $13.4 billion from $7.5 billion, of which $12.2 billion (2021: $6.5 billion) from passengers and cargo almost on par with that of last year ate $328 versus $326 million. Total expenses were up to $12.4 billion versus $7.0 billion, of which fuel accounted for $4.0 billion ($1.6 billion). In April, American already said it would be profitable in Q2.
For the first six months, American like United was also still loss-making at $-1.159 billion compared to $-1.231 billion last year. The operating loss was reduced to $-706 million from $-874 million. Total revenues for HY1 increased to $22.3 billion from $11.5 billion, with passenger revenues up to $20 billion ($9.7 billion) and cargo revenues to $692 million ($641 million).
During Q2, American says that its flight schedule as measured by total departures was 25 percent higher than that of its next competitor. It is happy that it was able to run its operations at higher reliability levels compared to Q2 2019. American saw increased demand for leisure travel while corporate travel is also picking up.
The carrier ended the first half year with $15.6 billion in liquidity and has $35 billion in long-term debt and finance leases. It is on track to reduce debt by $15 billion until 2025. For Q3, the carrier expects revenues to increase by 10-12 percent compared to Q3 2019, although capacity will be 8-10 percent down. American expects to stay profitable in Q3.
On the fleet, American said in its investor’s call that it expects to take delivery of two Boeing 787-8s in August. This would mean that the thorough review of the Dreamliner production issues is about to be completed and approved by the FAA anytime now. Boeing paused deliveries in May 2021 and has grown an inventory of 787s since then of some 115-120 aircraft. American hopes to get another seven aircraft this year and four in 2023.
