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American Airlines bullish on demand as Southwest reports loss

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American Airlines scored record revenue in the fourth quarter amid strong travel demand./AFP
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Jan 27, 2023 - 07:11 AM

NEW YORK — American Airlines offered a confident outlook on 2023 travel demand Thursday after reporting record quarterly revenues, while Southwest Airlines continued to suffer the effects of recent operational problems.

Notching its third straight quarter of positive earnings after the deep Covid-19 downturn, American reported net profit of $803 million on a 40 percent jump in revenues to $13.2 billion in the fourth quarter.

The company reported a loss of $931 million in the year-ago period.

“Demand remains strong,” Chief Executive Robert Isom said on a conference call with analysts.

“We expect a strong demand environment to continue in 2023 and anticipate further improvement in demand for long-haul international travel this year.”

The figures come on the heels of similar results from rivals United Airlines and Delta Air Lines.

The major US carriers are running at below their pre-pandemic capacity as the industry struggles with constraints on everything from pilots to new aircraft production to the US air traffic control system.

American’s 2023 forecast estimates between a five and eight percent increase in seat capacity.

While American won praise for its handling of a big winter storm over the holidays, results from domestic-focused Southwest Airlines showed the impact of that carrier’s difficulties.

Southwest canceled more than 16,700 flights during the quarter as its scheduling systems became overwhelmed while much of the United States encountered sub-freezing temperatures and some cities faced blizzards.

Southwest reported a loss of $220 million on revenues of $6.2 billion, which were up 22 percent from the year-ago period.

Southwest experienced an increase in flight cancellations and deceleration in bookings in early 2023, “which are assumed to be associated with the operational disruptions in December 2022,” the company said in a press release.

While Southwest estimates a negative impact of as much as $350 million in lost revenues in the first quarter of 2023, “encouragingly booking trends have improved sequentially this month,” it said.

Shares of American were flat at $16.26 in early afternoon trading, while Southwest fell 4.4 percent to $35.26.

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