A Southwest Airlines jet leaves Midway Airport in Chicago, Illinois.
Scott Olson | Getty Images
American Airlines and Southwest Airlines announced Thursday that leisure bookings are recovering and flights will ramp up ahead of the main summer travel season.
Your competitors also reported an improvement in demand for travel last week since the spring break in March, as more people are vaccinated and tourist attractions reopen. This is a welcome trend for the U.S. aviation industry, which lost more than $ 35 billion in total over the past year.
American stocks fell 1% in midday trading, while Southwest stocks rose 1.3%.
“Thank goodness people are being vaccinated and thank goodness people are ready to go back to their lives and move around the country,” said Gary Kelly, CEO of Southwest, in an interview with CNBC’s “Squawk on the Street”.
Southwest reported $ 116 million in profits, boosted by more than $ 1 billion in federal payroll grants, and expects its core cash flow to be “or better” by June. Average core usage is expected to be $ 2-4 million per day in the second quarter, compared to $ 13 million in the first three months of the year.
The Dallas-based airline plans to restore much of its flight capacity to around 85% prepandemic levels in the second quarter.
Southwest’s much larger neighbor, American, said it plans to run capacity in the second quarter that is 20% to 25% less than in the same quarter of 2019.
Texas-based American Forth Worth lost $ 1.25 billion in the first quarter. This is the fifth quarterly loss in a row, but a sum that decreases as bookings increase. Like its big competitors Delta and United, it has been forced to forego much of the business and international travel revenues that these airlines have long relied on. American CEO Doug Parker said the demand for business travel is gradually improving but is still well below pre-pandemic levels.
American revenue for the first quarter was just over $ 4 billion, a decrease of nearly 53% from more than $ 8.5 billion a year ago and below analyst expectations. Better demand will help both airlines reduce their cash usage. American had an average daily cash burn of $ 27 million in the first quarter, which fell to $ 4 million in March. After adjusting for one-time effects, American lost $ 4.32 per share, a penny more than analysts estimated.
“The pandemic is far from over. We must keep fighting like never before and make sure that the American is at the forefront when the green flag falls,” said Parker and President Robert Isom in a statement to staff. “As our world advances every day in the COVID-19 vaccination effort, customers return again on travel and there is no doubt that the pace of recovery is accelerating.”
American plans to fly more than its major network competitors compared to its 2019 capacity.
“While we’re more conservative in the short term. Being accurate means we’re spending less money, which means we have more resources to invest in the recovery,” said Scott Kirby, United CEO, on the airline’s quarterly call early this week.
Southwest’s revenue fell to $ 2.05 billion, a decline of more than 51% year over year and slightly below Wall Street analysts’ expectations of $ 2.07 billion. Southwest posted adjusted loss per share of $ 1.72, lower than analysts’ forecast of $ 1.85 per share.
More than half of US adults have received at least one dose of Covid-19 vaccine, and airline executives hope the trend will spur more travel and ultimately more overseas travel and work than it did last dismal year.
Some airlines, including American, United, Spirit and JetBlue Airways, have resumed or plan to resume hiring pilots this year, while airlines have also had to increase pilot training in recent months as demand rebounded .