Airways are returning to profitability

After a solid year and a half of steadily rising losses, the major airlines reporting profits this week are finally showing signs of a profitable turnaround.

Delta Air Lines, American Airlines and Southwest Airlines all reported positive gains as their gains became known, with United Airlines being the only one of four to post losses in their second quarter results. And even United’s losses have been drastically reduced, with the airline expecting a return to profitability in the back end of 2021.

Atlanta-based Delta Air Lines ended its losing streak in the five quarters, posting a profit of $ 652 million thanks to federal coronavirus aid and domestic leisure bookings that increased dramatically in the second quarter of the year. The airline also said it would be profitable for the second half of the year without state aid.

American Airlines had a similar story to tell: a streak of five quarters with net income of $ 19 million for the quarter. Revenue for the three months ended June 30 was $ 7.48 billion, down from just $ 1.6 billion last year and above analysts’ expectations. American’s profitability is marked with a small asterisk: After factoring in the one-time expenses, American was down $ 1.1 billion, or $ 1.69 per share.

Southwest, on the other hand, had no such star in the second quarter, and the Dallas-based airline’s revenue rose nearly 300 percent year over year to $ 4 billion – a 32 percent decrease from $ 5.9 billion in the second quarter of 2019 , but a significant improvement over the second quarter of 2020 when the airline posted a net loss of $ 915 million versus net income of $ 348 million reported in the second quarter of 2021.

A similar message was heard from all of the major airline CEOs, on their earnings reports, touting the rising consumer demand for air travel as a sign that the industry has not fully recovered but is on its way back from a long and long time is difficult time. United CEO Scott Kirby was particularly upbeat in his optimism and stated in his call with investors after the release that they are not only seeing the light at the end of the tunnel, but preparing to see the tunnel in the face of the rapid development completely leaving spread of Delta brave of COVID-19.

“While we expect the number of cases to increase given vaccination rates, they will still remain well below the peak and hospitalizations and deaths will not rise nearly as much,” he said. “The logical result is that the reopening is going according to plan.”

Not quite blue skies ahead

Maybe on the right track, but not entirely smoothly for everyone involved. With cuts in both routes and staff in 2020 as a result of the pandemic, Delta, Southwest and American all reported pressures to rebuild and staff quickly.

All three airlines confirmed in their comments to analysts that hiring spurts are currently underway and that there are hopes to be fully operational by the end of the third quarter of 2021. United was once again the outlier in this regard, noting that it had not faced the massive hiring problems of its competitors as it had “ramped up our schedule over the past three months” in anticipation of the increasing demand that is now increasing across the industry is watching.

A well-recognized problem is the uneven return for demand between domestic and international travel. While all four airlines reported that domestic traffic has recovered to near pre-pandemic levels, the uneven distribution of vaccines around the world and the rise of more aggressive coronavirus variants have kept international demand stagnating and is expected to recover more slowly. Ed Bastian, Delta CEO, stated in his comments to analysts that the airline expects international demand to likely return within this calendar year and said that “we see clear signs of a recovery in international demand in the fall”.

The question mark for the demand for business travel

Another area of ​​reluctance to return is the business travel segment, which has received significantly less attention from airlines when reporting their results. United addressed the issue most directly in a phone conversation with analysts, showing a largely positive attitude, although confirming that business travel was still 60 percent less than before the pandemic.

“We expect business demand to improve by about 40 to 45 percent compared to 2019 by the end of the third quarter,” said United’s Kirby.

Delta touched on the topic but was a bit vague, saying it expects to maintain the leadership position in this segment of the market despite increasing competition from United, which announced its intention to double the area last month. Bastian also noted that domestic corporate volumes rebounded about 40 percent in June, doubling from the 20 percent recovery observed in March.

However, given the strength and speed with which leisure travel has returned, it seems to beg a question whether airlines are still a little over-optimistic about the return of the more lucrative business travel segment. As PYMNTS previously reported, working on Zoom (or Google Meets, or one of the many video conferencing options out there) is no longer just an acceptable addition for a large number of businesses, it’s a real business improvement. That doesn’t mean business travel is forever dead, Ingo Money CEO Drew Edwards stated earlier this year in an interview with Karen Webster about this new reality.

“I still think people want to get out, but I may not be as eager to go to a 20,000 conference as I used to,” he said. “But I don’t think the days when you go to New York and have dinner with six people in a private dining room are forever dead.”



About the course: Super connected consumers use a variety of connected devices to interact, shop, and pay online, but say password-based authentication slows them down. PYMNTS surveyed 2,127 consumers and found that these highly connected, highly desirable customers want financial institutions (FIs) and merchants to give up the password and provide a better, more secure way to authenticate online.

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