American Airlines Says Travel Demand Remains Strong Despite Higher Fares

American Airlines Says Travel Demand Remains Strong Despite Higher Fares


American Airlines


AAL -0.56%

Group Inc. said demand for travel has continued to strengthen despite higher fares driven by surging fuel costs, echoing other airlines that have reported quarterly results recently.

“The demand environment is very strong, and as a result, we expect to be profitable in the second quarter based on our current fuel price assumptions,” Chief Executive

Robert Isom

said.

The company said U.S. demand for business travel has improved as offices reopened and travel restrictions were lifted. For the current quarter, the company said it expects sales to top 2019 levels by 6% to 8%.

Shares of American Airlines jumped more than 10% in premarket trading to $21.51.

‘The demand environment is very strong, and as a result, we expect to be profitable in the second quarter.’


— American Airlines CEO Robert Isom

The Fort Worth-based airline on Thursday reported a $1.64 billion loss over the three months ended March 31, but said that March was the first month since the start of the pandemic that sales surpassed 2019 levels, despite soaring fuel prices. Excluding special items, American was profitable in March, it said.

Operating revenue rose to $8.90 billion from $4.01 billion a year earlier. Analysts were looking for $8.79 billion.

Load factor, or the portion of seats filled, was 74.4% in the quarter, up from 59.5% a year earlier. Capacity rose 57.6%, the company said.

The spread of the Omicron variant of Covid-19 around the holidays and at the start of the year was a setback for airlines and other travel companies. U.S. travelers canceled trips, businesses canceled convention plans and thousands of airline workers called in sick, hampering operations.

Passengers at Denver International Airport this week. Demand for travel has returned even as consumers faced higher fares.



Photo:

Chet Strange for The Wall Street Journal

As daily new case numbers began to fall, demand for travel returned even as consumers faced higher fares driven by jet-fuel prices and labor costs.

Jet-fuel costs climbed to their highest levels since 2008 as Russia’s invasion of Ukraine drove up crude-oil prices last month. American Airlines reported a 64.7% increase in jet-fuel prices for the first quarter, to $2.80 a gallon.

Airfares have started to climb in tandem as carriers pass those higher costs on to consumers. Domestic ticket prices in March were 20% higher than 2019 levels, and up 15% from February, according to the Adobe Digital Economy Index.

Adobe said this week that there are signs that the higher fares are starting to curb travel appetite. In the first half of April, domestic bookings online were down 2% from the first two weeks for March, though flight bookings are still ahead of prepandemic levels.

Video shows some airline passengers cheered when carriers announced they would no longer be requiring masks on domestic flights after a Florida federal judge voided the Biden administration’s Covid-19 mandate. Photo: Brian Snyder/Reuters

Last week,

Delta Air Lines Inc.

said those higher costs haven’t kept Americans from traveling. The airline, like American, said it expected to return to profitability in the current quarter amid strong summer sales and bookings.

Overall for the quarter, American Airlines posted a net loss of $1.64 billion, compared with a loss of $1.25 billion in the year-ago period. On a per-share basis, the company posted a loss of $2.52, compared with a loss of $1.97 a year earlier.

Stripping out one-time items, the company posted a loss of $2.32 a share. Analysts polled by FactSet were expecting an adjusted loss of $2.39 a share.

Write to Will Feuer at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Share:

Facebook
Twitter
Pinterest
LinkedIn
Rachel Meadows

Rachel Meadows

Trending topics news writer who enjoys cooking, walking her dog and travel.

Related Posts