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Business News » World News

American Airlines, Southwest profits beat on strong travel demand

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American Airlines and Southwest Airlines Co on Thursday posted fourth-quarter profits and 2019 forecasts that beat Wall Street expectations thanks to healthy passenger demand and easing investor concerns about slower global economic growth.

The profit beats, which mirrored solid results from rivals Delta Air Lines and United Airlines earlier this month, boosted shares.

American rose 6 percent and Southwest was up 4 percent in morning trade, lifting the broader Dow Jones U.S. Airlines Index.

Airlines did warn about the rippling effects of a U.S. partial government shutdown, which is causing long lines at some airports and air space delays due to stretched federal security and air traffic control staff, who are obliged to work but are not being paid.

Dallas, Texas-based Southwest said the shutdown had knocked between $10 million and $15 million off its revenue in January and was delaying its plan to launch service to Hawaii, which was targeted for early this year.

But as the government closure dragged into its 34th day, many non-essential federal workers, including those who oversee route authorizations and aircraft certifications, remained furloughed.

No. 1 U.S. carrier American said revenues per mile flown, a closely watched performance metric which compares sales to flight capacity, would be flat to up 2 percent in the current quarter, taking into account the shutdown which it said was impacting 0 to 14-day bookings.

"We encourage the government to open," American Chief Executive Officer Doug Parker said.

Still, American said overall demand, including for corporate travel, remained strong, and forecast $1 billion of additional revenue in 2019 as it continues to expand its Premium Economy product and adds new gates at its Dallas-Fort Worth and Charlotte hubs.

The company, based in Fort Worth, Texas, forecast full-year earnings per share to rise between 21 percent and 65 percent, well above the 30 percent increase expected by analysts on average, according to IBES data from Refinitiv.

It said net income, excluding special items, rose 8.3 percent to $481 million, or $1.04 per share, in the fourth quarter ended Dec. 31, beating analysts` estimate of $1.01 per share.

Total operating revenue rose 3.1 percent to $10.94 billion.

Southwest, the fourth largest U.S. airline by passenger traffic, forecast revenues per available seat mile to rise in the four to five percent range in the first quarter after a 1.8 percent rise in the fourth quarter.

Net income at Southwest, with a reputation as a employee and customer friendly low-cost carrier, fell to $654 million, or $1.17 per share, from $1.75 billion, or $2.94 per share, a year earlier. That beat forecasts for quarterly profit of $1.07 per share, according to IBES data from Refinitiv.

The year earlier quarter included a tax benefit of $1.3 billion.

New York-based JetBlue Airways Corp, the sixth largest U.S. airline, also posted quarterly profit on Thursday above Wall Street forecasts.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

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Economy
Updated: Thu, Jan 24, 2019
10:15 pm
Reuters
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