American Airlines has revealed a small profit of $19 million for the second quarter of 2021. While smaller than the profits announced by its major rivals, a profit isn’t a loss, Meaning that the airline will surely be content that the worst of the pandemic is now over.
The past year has been reasonably brutal for much of the aviation industry, with many airlines reporting losses and relying on aid to stay flying. In the US, most airlines were relying on assistance from the CARES act to keep them flying. Now, it seems as though profits are back in fashion.
$7.5 billion in revenue
In total, American Airlines took in $7.5 billion of revenue during the quarter. The vast majority of this, $6.5 billion to be exact, came from passengers. This was a considerable increase from 2020, when only $1.108 billion of revenue was generated by passengers.
The airline also saw the number of passengers and the load factor increase significantly. Last year the airline carried eight million passengers on flights from April to June. This year that shot up by tens of thousands to 44 million. This allowed the airline’s load factor to increase by 34.7% to 77% this year.
Where did the airline spend money?
$7.5 billion is a lot of money. With a net income of $19 million, you may be wondering where the other $7.3 billion went. $7 billion of this went to operating expenses. The most considerable single cost was spending on salaries, wages, and benefits, which clocked in at $2.9 billion.
American Airlines spent $1.6 billion on fuel for its aircraft and related taxes. $635 million went to the airline’s regional partners, while $459 million was spent maintaining the fleet. Renting the fleet from lessors cost the airline $356 million, while other expenses such as crew hotels, catering, and ground handling cost just under $1 billion.
Within this $7 billion expenses is a cost of -$1.3 billion recorded for “special items,” which the airline says includes a credit for financial support under the payroll support program. A further PSP credit was recorded under the figure for regional pattern costs. Presumably without this, it wouldn’t have turned a profit. The airline said,
“The Company recognized $1.4 billion of net special credits before the effect of taxes in the second quarter of 2021 principally related to the financial assistance received pursuant to Payroll Support Program Agreements.”
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Are things looking up for American Airlines?
While the airline’s profit was far lower than its main competitors, a profit is a profit at the end of the day. In this respect, we could say that things are starting to look up for American Airlines, especially considering it posted a $2.659 billion loss during last year’s second quarter.
While the airline has a long way to go, the general trend in the United States is improving. The TSA sees passenger numbers steadily increasing to near-normal levels, while domestic flights are now only down 10% from 2019 levels. As a result, American Airlines revealed that it has begun rehiring pilots and wants to take on some 1,350 by the end of 2022.
What do you make of the latest American Airlines results? Let us know what you think and why in the comments below!