American Airlines’ Financial Performance Results in Profit at Year-End

American Airlines’ financial performance has resulted in a year-end profit for the company in 2022. Like many airlines, American Airlines has suffered heavy losses during the pandemic. In addition, the recovery has not been easy, with airlines and airports being plagued with staff shortages as a result of people being laid off during the pandemic. As a result, American Airlines had to deal with mass delays and cancellations during this period. Many North American airlines were particularly affected during the Independence Day weekend, which resulted in mass delays and cancellations in the US and Canada.

American Airlines B787-9 Dreamliner
American Airlines suffered during the pandemic | © Wikimedia Commons

American Airline’s Financial Performance

However, American Airlines’ financial performance has improved, and for the 12 months up to the 31st December 2022, the company reported a profit of 127 million US dollars. This shows a dramatic improvement in American Airlines’ profit when compared to 2021, which for the 12 months up to December showed a loss of 1.993 billion US dollars. The fact that the company had to overcome such a great loss may explain why even though the company made a profit, the fourth quarter income for the three months up to December 2022 was, in fact, much higher at 803 million US dollars. This shows that overall losses in the earlier part of the year, when pandemic restrictions were largely still in place, would have affected the overall year’s results.

From a quarterly perspective, however, it does appear that American Airlines’ financial performance has improved as in the three months up to September 30 2022, the company made 483 million US dollars. So as the quarterly profit in the fourth quarter was 803 million US dollars, this shows that profit for the quarter improved by approximately 66%. This continues the upward trend in terms of American Airline’s profit which has continued with an initial first-quarter loss of 1.6 billion US dollars, a second-quarter profit of 476 million US dollars, a third-quarter gain of 483 million US dollars and finally, the fourth quarter a yield of 803 million US dollars meaning American Airlines’ financial performance has improved for three quarters in a row.

American Airlines aircraft parked
American Airlines’ financial performance has improved for three quarters in a row | © AP

American Airline’s Revenue

In terms of revenue at the year-end, American Airlines’ financial performance has improved, resulting in operating revenue (revenue from services provided) of 48.971 billion US dollars at the year-end in 2022 compared to 29.882 billion US dollars for the previous year. This puts American Airlines’ revenue improvement at approximately 64%, showing that American Airlines is also experiencing more demand from customers and generating new business.

In terms of costs, the total operating expense (costs incurred in providing services) has increased from 30.941 billion US dollars at the year-end of 2021 to 47.364 at the year-end of 2022. This translates to an increase of approximately 53% in operating costs. The fact that operating costs have increased by 53%, whereas revenue has risen to a greater extent (by 64%) indicates an improvement in cost control in terms of service provision over the past year.

In terms of the company’s response, the company’s CEO, Robert Isom, has talked very positively about American Airlines’ financial performance describing it as outstanding. He praised his team for a very good performance in challenging circumstances. He also stated that over this year, the airline will continue to prioritise reliability, profitability and debt reduction.

The mood at the airline is positive, especially since American Airlines’ financial performance has returned to profitability. Throughout the year, the airline has seen an improvement in quarterly profits, which is also an encouraging sign. We have to wait to see how this progresses.

What do you think about these year-end results? Do you agree with our analysis? Let us know in the comments!

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Amuthan Chandrarajan
Amuthan Chandrarajan
Aviation Reporter - Amuthan has a background in residential and commercial real estate. He also has a keen interest in aviation and travel and has visited many countries. Amuthan has a sound knowledge of business and finance.  He has gained a Master of Business Administration and has become a Chartered Management Accountant.