American Airlines is reporting a $1.34 billion profit for the second quarter, boosted by strong ticket sales and a huge drop in the price of jet fuel and the airline raised its profit expectations for the year.
Revenue rose 5% to a quarterly record of $14.06 billion. International travel in particular is picking up, and that is helping American, United Airlines and Delta Air Lines.
Thanks to lower fuel prices, the carrier’s spending at the pump plunged 32%, saving the American about $1.3 billion compared with a year earlier.
That was partly offset, however, by labor costs that are rising and will soon increase much more rapidly. American recently agreed with union negotiators on a new labor contract that would raise pilot pay by more than 41% over four years. The two sides are now renegotiating after pilots at United got a better deal.
The Allied Pilots Association, which represents crews at American, valued the previous deal at $8.3 billion over four years, and improving it to match United will likely bring its cost to about $9.5 billion.
“My primary interest is making sure our pilots are taken care of. They deserve these increases, and we can’t wait to deliver them to them,” CEO Robert Isom said Thursday on CNBC.
Separately, American’s flight attendants want immediate raises of 35% followed by annual raises of 6%.
American executives haven’t said how they will pay for new contracts.
On the travel front, American has reduced its cancellations compared with a miserable summer last year. The airline credits technology that lets planners adjust flight schedules based on factors including weather forecasts at major airports, crew schedules and passenger numbers on each flight.
American said third-quarter earnings would be 85 cents to 95 cents per share, in line with expectations. The airline now expects to earn between $3 and $3.75 per share for the year, up from a previous forecast of $2.50 to $3.50. Analysts have been projecting $3.12 per share, according to a FactSet survey.
For the second quarter, excluding one-time items, American earned $1.92 per share, beating the analysts’ consensus of $1.59 per share. Revenue also beat Wall Street’s forecast of $13.74 billion.
Isom called it a “fantastic quarter” for Fort Worth, Texas-based American, and said the airline will focus on profitability and improving its balance sheet, which saw an expansion of debt during the pandemic, AP reports.
