U.S. carriers see strong profit on resilient travel demand
2023.04.27 10:08
© Reuters. FILE PHOTO: An American Airlines Airbus A321 plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, U.S. March 28, 2018. REUTERS/Mike Blake
By Rajesh Kumar Singh
CHICAGO (Reuters) -U.S. carriers expect strong profit in the current quarter as travel demand remains strong despite growing risks of an economic recession.
Southwest Airlines (NYSE:) Co sees “solid” profit in the June quarter on strong summer bookings.
“While we are mindful of the uncertain economic environment, demand for domestic air travel remains strong, thus far,” Southwest’s CEO Bob Jordan said.
Rivals Delta Air Lines (NYSE:) and United Airlines have also offered an upbeat outlook for summer travel.
Rising interest rates, high inflation, mounting job losses and turmoil in the banking industry have fueled concern about the strength of consumer spending, which has allowed carriers to mitigate higher labor and fuel costs.
Some analysts are not sure the travel boom will last long. But airlines say demand remains resilient, with bookings for international trips outpacing those for domestic travel.
American Airlines (NASDAQ:) on Thursday forecast an adjusted profit of $1.20 per share to $1.40 per share for the quarter through June, above analysts’ average estimate of $1.04 per share. American plans to ramp up its long-haul international capacity by 82% in the current quarter from a year ago.
“We have a strong demand environment this summer, and we’re highly confident that, that will continue going forward,” American’s CEO Robert Isom told analyst.
Shortages of pilots, air traffic controllers and new planes, however, have limited the industry’s ability to fully capitalize on consumer demand.
Southwest trimmed its capacity growth plans due to Boeing (NYSE:)’s aircraft delivery delays. The Dallas-based airline said it now expects 70 deliveries of the 737-8 jet this year instead of the planned 90 after the U.S. planemaker disclosed a manufacturing issue with some of the workhorse aircraft.
Ultra-low-cost carrier Spirit Airlines (NYSE:) on Wednesday said issues related to jet engine availability and pilot attrition are not letting it add more flights.
