A Tale of Two Airlines: Big Profit for American, Loss for Southwest

FORT WORTH, Texas — (AP) — American Airlines provided further evidence of a rebound in air travel Thursday, posting higher-than-expected fourth-quarter earnings, while Southwest Airlines lost money due to massive flight cancellations last month.

Southwest said it also expects another loss in the first quarter, saying it was encouraged by booking trends for March.

Southwest posted a $220 million loss after posting an $800 million loss in the last 10 days of December as a result of nearly 17,000 flight cancellations.

The airline signaled it would lose money, but an adjusted loss of 38 cents per share was worse than the 7 cents per share that Wall Street had expected.

The company’s shares fell 2.4% in premarket trading.

The Department of Transportation is investigating whether Southwest scheduled more flights than it could realistically expect, which it says would violate federal laws on fraudulent trade practices. Southwest says its schedule was “well thought out” and the airline had ample staff.

Southwest blames this on an “unprecedented storm” that swept the country ahead of Christmas. Other airlines recovered faster, while massive cancellations at Southwest dragged on for several days.

On Thursday, CEO Robert Jordan again apologized for the collapse.

“We have quickly taken steps to improve our operational resilience and are conducting a detailed review of the December events,” he said. The Dallas-based company hired outside experts and set up a board committee to review developments and redefine Southwest’s technology priorities.

The American reported a profit of $803 million. Excluding special items, earnings per share were $1.17. According to a FactSet survey, analysts were expecting $1 per share.

Fourth-quarter revenue hit a record $13.19 billion, up 40% from a year earlier and better than analysts had expected, leading to record full-time revenue.

The Fort Worth, Texas-based carrier is back on full-year earnings and forecasts 2023 earnings in the range of $2.50 to $3.50 per share. In the first quarter, American expects to break even based on demand and fuel trends.

Shares rose 1.5% in premarket trading.

American’s results added to the picture of strong demand for air travel, reflected in United Airlines’ earnings of $843 million and Delta Air Lines’ $828 million.