For the first time in over a year, American Airlines financial performance has resulted in a loss for the company. This has been a significant dip with the airline making a loss of 545 million US dollars in the three months up to September 30th 2023. When compared to the previous year there has been a significant fall from 483 million US dollars profit in the three months up to September 30th 2022. One can see that American Airlines financial performance has moved from a multi-million dollar profit to a multi-million dollar loss.
When compared with the profit made in the previous quarter which was 1.338 billion US dollars, the loss is also considerable. This is especially true given the fact that there was a significant improvement in the previous quarter’s profit (second quarter) when compared to the quarter previous to that (the first quarter) where American Airlines financial performance resulted in a profit of only 10 million US dollars which in itself, as we know, was a dip in profit but a dramatic improvement from the previous year and the first time that the company had made a profit in that time period for four years. So as we can see this dip from a previous quarter was in fact normal in terms of seasonal variation and therefore was less cause for concern. This is not however the case for this quarter’s profits which were a dramatic fall not only when compared to the previous quarter but also when compared to the same quarter last year. This means that for this quarter American Airlines has more to worry about.
The Reasons For This Decline
In terms of Revenue (total money received), American Airlines’ financial performance has resulted in a small improvement of 0.1%. The airline made a figure of 13.482 billion US dollars profit in the three months up to September 30th 2023. At the same time in the previous year American Airlines’ revenue was 13.462 billion US dollars. This does show that American Airlines is attracting more customers and that more money is coming into the company. There does however appear to be a problem in company costs.
On further investigation there does appear to have been a one off charge exclusive of tax of 808 million US dollars for what are called special items. These are events that don’t occur generally and therefore would not necessarily be a source of concern for American Airlines as they are less likely to affect American Airlines’ financial performance on a long term basis. These special items include a collective bargaining agreement (which in this case appears to be a wage agreement) as well as charges associated with a one time extinguishment of debt payment as well as losses on the basis of the reduction in value in certain external share investments. Excluding these one time payments, according to the press report, create a revised profit of 263 million US dollars. So as one can see these special items if removed would make the multi million loss in this quarter into a multi million dollar profit for this quarter. However even this revised profit is still 45% less than the profit in the same quarter last year. This shows that the company has performed less well than previously.
The Company’s Response
Robert Isom, American Airlines’ Chief Executive Officer, has commented that he feels that the airline has delivered a strong performance delivering what he describes as record setting reliability and operational performance. The report also comments that American Airlines’ revenue is at record levels for this time period.
As one can see the company views American Airlines’ financial performance as good. In some ways it is right as revenue has improved and the company claims that it is at the highest level for this quarter. However the company has in fact made a loss and even if you exclude special items the company is still faring less well than last year. We have to wait to see how this progresses.
