As we know American Airlines returned profit like many airlines in the previous quarter ending in June of this year. This was great news as many had suffered during the pandemic making losses when Covid restrictions meant fewer passengers and therefore less revenue (total money received). When passengers returned after the pandemic restrictions were lifted there were problems as many airlines and airports were short staffed as many workers had been laid off during the pandemic. In North America there were problems during the Independence day weekend resulting in mass delays and flight cancelations in Canada and the United States. However now that the situation is improving and that many airlines are already making progress, what is the position of American Airlines?
American Airline’s Financial Performance
Well the good news is that American Airlines is continuing to make a profit. In its latest financial statements in the three months ending September 30th the company made a profit of 483 million US dollars. This compares favourably to the previous quarter where the company made a profit of 476 million US dollars. This means that the company’s profit has improved by approximately 1.5%, This is a small increase compared to the dramatic increase in profitability between the first and second quarter. During this time American Airlines improved from a colossal 1.6 billion US dollar loss in its first quarter ending 31st March to the 476 million US dollar profit in the second quarter ending 30th June.
As one can see the improvement in profit is much less between the second quarter and the most recent third quarter financial statements than the increase between the first and second quarter. This may mean that American Airlines is approaching its maximum in terms of its financial performance as all the passengers that want to travel are able to do so and therefore there is less room for potential growth. In order to grow further the airline may have to find other untapped markets.
American Airline’s Revenue
In terms of revenue the improvement is also less with the current revenue being 13.462 billion US dollars in the three months up to 30th September compared to 13.422 billion US dollars in the quarter leading up to 30th June . This indicates that revenue increased by approximately only 0.3%. This also suggests the fact that American Airlines has reached the maximum it can make in the current environment. The company’s profit has increased by 1.5% whereas revenue has increased by 0.3%. This indicates that American Airlines, on a more positive note, has improved in terms of cost control. So what is the airline’s response?
American Airlines has commented that the profit it has made in this quarter is the highest quarterly profit it has made in its history. It has also remarked that it anticipates that revenue will increase further as travel restrictions which are still In place around the world are lifted. It also said that its record revenue comes despite having 9.6% less capacity than pre pandemic 2019. American Airlines has further commented that it is still on track to pay 15 billion US dollars of debt by 2025.
As one can see American Airlines is still making a profit but the increase when compared to previous quarter is small. However, the airline has commented that its quarterly revenue is the highest it has achieved in its history. It also implies that further growth is possible as other countries relax travel restrictions and it builds up its capacity to pre Covid levels. In addition, the company is also financially healthy and maintaining its debt obligations. We have to wait to see how this progresses.