American Airlines and Southwest Airlines both reported significant financial losses for the first quarter of the year, according to a report from the New York Post.
The airlines are grappling with rising labor costs and delays in receiving new aircraft from Boeing, which is limiting their ability to expand their flight offerings despite the high demand for travel.
American Airlines reported a loss of $312 million, largely attributed to an 18% increase in labor costs, amounting to nearly $600 million.
However, the airline remains optimistic about its future prospects, expecting to return to profitability in the second quarter, which is traditionally a busier time for travel.
American Airlines anticipates earnings between $1.15 and $1.45 per share, aligning with analysts’ expectations of $1.15 per share, according to FactSet.
The first-quarter loss, excluding special items, was 34 cents per share, slightly worse than the analysts’ forecast of a 27 cents per share loss. The airline’s revenue for the quarter stood at $12.57 billion.
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Similarly, Southwest Airlines reported a loss of $231 million and announced a series of measures to address its financial underperformance and cope with delayed deliveries of new planes from Boeing.
Southwest Airlines to end service at four airports, fire 2000 employees https://t.co/qzjCv5tWdg pic.twitter.com/Lm1PL6v8Ba
— New York Post (@nypost) April 25, 2024
CEO Robert Jordan stated that the airline would limit hiring, offer voluntary time off to employees, and cease operations at four airports: Cozumel, Mexico; Syracuse, New York; Bellingham, Washington; and George Bush Intercontinental Airport in Houston, where the airline’s major operation is at the smaller Hobby Airport.
As a result of these measures, Southwest expects to have 802 aircraft by the end of the year, down from its earlier plan for 814 planes.
The airline also anticipates ending the year with 2,000 fewer employees than it had at the beginning of the year.
The Dallas-based airline reported a loss of 36 cents per share, excluding special items, which was slightly worse than the Wall Street expectation of a 34 cents per share loss, according to a FactSet survey.
The financial losses experienced by American Airlines and Southwest Airlines illustrate the persistent challenges faced by the aviation industry.
Rising labor costs and delays in receiving new aircraft are proving to be significant hurdles for airlines as they strive to meet the growing demand for air travel.
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As these airlines implement various measures to address their financial underperformance, it remains to be seen how quickly they can adapt and recover in the face of these ongoing challenges.
