American Airlines has announced its first quarter results for 2019 showing record revenue and positive profits.
Pre-tax profit stood at $245 million while net profit amounted to $185 million. Revenue was up by 1.8%, at a record $10.6 billion and was able to return $646 million back to shareholders.
Chairman and CEO of American Airlines, Doug Parker said: “We want to thank our 130,000 team members for the outstanding job they did to take care of our customers, despite the challenges with our fleet during the quarter. Their hard work led American to record revenue performance under difficult operating conditions.
As we progress toward the busy summer travel period, demand for our product remains strong. However, our near-term earnings forecast has been affected by the grounding of our Boeing 737 MAX fleet, which we have removed from scheduled flying through Aug. 19. We presently estimate the grounding of the 737 MAX will impact our 2019 pre-tax earnings by approximately $350 million. With the recent run-up in oil prices, fuel expenses for the year are also expected to be approximately $650 million higher than we forecast just three months ago.
As we look forward to 2020 and beyond, we anticipate that our free cash flow production will increase significantly as our historic fleet replacement program winds down. We are very bullish on our future and focused on creating value for our shareholders.”
Unfortunately, the carrier’s pre-tax earnings were at $314 million, lower than the $463 million. Net income was also lower, amounting to $237 million compared to $353 million the previous year. Operating expenses were at $10.2 billion. American Airlines was also able to report a positive load factor of 82.2%.
The first quarter was particularly troublesome for American Airlines. In fact, the airline grounded 14 Boeing 737-800 aircraft after they needed some necessary rework on their interiors. That forced 940 cancellations.
Additionally, American had to ground its entire Boeing 737 MAX fleet consisting of 24 strong airframes, following two catastrophic crashes involving the type in the space of 5 months. Subsequently, a further 1200 flights were cancelled.
American Airlines has been hit hard. However, as one of the big three carriers in the United States, one could say that they are performing well, compared to airlines such as Lufthansa who are struggling from increased competition and rising fuel prices.
But Lufthansa isn’t the only carrier in trouble: Hawaiian Airlines also reported terrible figures for the first quarter and it may get worse after Southwest Airlines begins normal operations to and within Hawaii once its Boeing 737 MAX problems are solved.
So the aviation industry as a whole is struggling. Norwegian facing a huge crisis with its 787s and 737 MAX fleet, Hawaiian Airlines finding it difficult to keep up with competition and carriers all around the world facing a global pilot shortage. The Lufthansa Group as a whole is also doing very badly. So, with many carriers in the red, should we be expecting lots more to go bust?