American Airlines gave more proof Thursday of the recovery in air travel, posting a better-than-expected profit for the fourth quarter, while Southwest Airlines lost money because of massive flight cancellations last month.
Southwest said it also expects another loss in the first quarter of 2023 while saying it was encouraged by booking trends for March.
Southwest reported a $220 million loss after taking a hit of $800 million from canceling around 16,700 flights over the last 10 days of December, according to airline executives during the carrier’s fourth-quarter earnings call on Thursday.
The Transportation Department is investigating whether Southwest scheduled more flights than it could realistically expect to handle, which it says would violate federal laws against deceptive trade practices. Southwest says its schedule was “thoughtfully designed,” and the airline had ample staffing.
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Southwest blames an “unprecedented storm” that swept the country around Christmas. Other airlines recovered more quickly, while widespread cancellations at Southwest dragged on for days.
On Thursday, CEO Robert Jordan again apologized for the meltdown.
“We disrupted thousands and thousands of customers at a really critical period of time,” he said during the earnings call. “At the end of the day, that kind of disruption cannot happen again.”
The Dallas-based company has hired outside experts and created a committee of its board to review the events and reexamine Southwest’s technology priorities.
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According to executives on the call, early findings indicate that the company’s automated crew scheduling system was unable to cope with the large number of close-to-departure cancellations that happened in late December during what they took to calling “the event,” but they added that a software update is already being implemented to mitigate the risk of a similar problem happening again in the future.
“The disruption uncovered a functional gap in our technology,” which the company is working to address, Southwest’s chief operating officer Andrew Watterson said during the call.
Also on Thursday, American Airlines reported a profit of $803 million. Excluding special items, earnings per share totaled $1.17. Analysts expected $1 per share, according to a FactSet survey.
Revenue was a fourth-quarter record of $13.19 billion, a 40% increase from a year earlier and better than analysts expected, leading to record annual revenue.
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The Fort Worth, Texas-based carrier returned to a profit for the full year and forecast 2023 earnings in a range of $2.50 to $3.50 per share. For the first quarter, American expects to break even, based on demand and fuel trends.
American’s results added to the picture of strong demand for air travel that was reflected in an $843 million profit for United Airlines and $828 million for Delta Air Lines.
JetBlue Airways also reported Thursday a fourth-quarter net income of $24 million, after reporting a loss in the same period a year earlier. And Alaska Air posted a fourth-quarter profit of $22 million, adding that its annual revenue of $9.65 billion was the highest in Alaska Air’s history.
Contributing: Zach Wichter, USA TODAY
Story Credit: usatoday.com