American Airlines’ financial performance has resulted in a profit at year-end in 2023. In its report released on January 25th, the company made a profit of 822 million US dollars in the 12 months up to December 31st 2023. The company’s profit is over 6 times more than the 127 million US dollars profit in the profit made in the previous year. This is a significant increase for the company and is, therefore, good news for American Airlines.
As we know, the situation relating to American Airlines’ financial performance has not been easy. Even in the third quarter of this year, the company made a loss for that quarter alone. There have also been long-term issues that have affected the industry as a whole. During the Covid pandemic, governments around the world restricted international travel, and the resultant slump in international travel severely affected American Airlines’ financial performance as well as that of many other airlines. To make matters worse, once pandemic restrictions were lifted, there was a surge in demand for flights, which airlines and airports could not cope with due to staff shortages as many had been laid off during the pandemic when demand was less. As a result, there was congestion at airports, leading to mass flight delays and cancellations. In North America, there were mass flight delays and cancellations during the Independence Day celebrations in the summer of 2022.
Despite the rocky road, American Airlines’ revenues are at record levels, with the company having made 52.788 billion US dollars in the 12 months up to December 31st 2023. This was 7.8% higher than the 48.971 billion US dollars made in the 12 months up to December 31st 2022. This shows that American Airlines’ financial performance has partly resulted from an increase in popularity among customers. In addition, the fact that profit has increased by over 6 times even though American Airlines’ revenue has still increased but by far less indicates that the airline’s ability to control costs has increased significantly.
In response to American Airlines’ financial performance, Robert Isom, the company’s Chief Executive Officer, has said that the airline has performed exceptionally well in 2023 and has praised his team, which he describes as outstanding. He also adds that he feels that American Airlines is well positioned for the future and is supported by a simplified fleet as well as the strength of its network. He says that the company remains focused on delivering a reliable operation for their customers as well as having plans to re-engineer to business to deliver an even more efficient service.
Cutbacks Paid Off
As we know, American Airlines’ financial performance resulted in a loss in the third quarter of 2023 of 545 million US dollars. This was, in fact, lower than the same time in 2022 and occurred despite the fact that revenue increased for the same time period. This indicated that there was mainly a problem with costs with a pronounced deficit even when removing one-off expenses. It does appear, however, that American Airlines made cost cuts in order to improve the situation. As reported previously in Travel Radar, when I visited the United States and used the airline, the plane was very packed with overhead compartments and space under the seats filled with baggage.
The cutbacks do seem to have paid off, with American Airlines’ financial performance improving in the fourth quarter. In the three months up to December 31st 2023, the airline made 19 million US dollars profit, which was still a significant reduction from the 803 million US dollars made at the same time in the previous year. However the company was at least still in the profit zone for the fourth quarter. This no doubt helped boost the overall year-end profitability.
On the whole, therefore, American Airlines’ financial performance was positive in the year 2023, as Chief Executive Robert Isom describes record revenues. The company’s profit has also improved very significantly at year-end in 2023 when compared to 2022. Isom also feels that the company is well-positioned for the future. We have to wait to see how this progresses.