American Airlines lost $931 million in the final three months of last year, as the Omicron variant of the coronavirus has pushed back the industry’s rebound.
After a year of recovery punctuated by setbacks, airlines are now focused on returning to profitability in 2022. Industry executives are hoping for a robust spring and summer driven by rebounds in corporate and international travel.
“Over the past year, we have experienced periods of high travel demand countered by periods of decreased demand due to new Covid-19 variants,” American’s chief executive, Doug Parker, said in a statement. “This volatility has created the most challenging planning environment in the history of commercial aviation.”
Omicron forced airline workers to call in sick at record rates over the holidays, compounding problems caused by winter storms and contributing to tens of thousands of cancellations during one of the year’s busiest travel periods. But American notably performed better over that period than its peers.
Over the two weeks starting on Dec. 25, American canceled just under 1,500 flights, compared with more than 4,300 at Southwest Airlines, more than 2,500 for United Airlines and more than 2,000 for Delta Air Lines. The cancellations represented 4 percent of American’s schedule, versus 9 percent of Southwest’s, 8 percent of United’s and 5 percent of Delta’s.
Omicron will continue to weigh on demand in January and February, American said. The airline expects capacity, as measured by seats sold and distance flown, to be about 8 to 10 percent less in the first three months of this year compared with the same period in 2019. Revenue is expected to be down 20 to 22 percent over the same period.
American is more optimistic about the rest of the year, expecting capacity to be down only about 5 percent fewer seats in 2022 from 2019. The airline also hopes to start turning profits again this year.
The company said that domestic and short-distance international travel had nearly fully recovered to prepandemic levels, while corporate travel within the United States was about 70 percent restored. Long-distance international travel continues to lag behind but is expected to improve as Omicron infections decline and vaccines are distributed abroad.
American said on Thursday that capacity was down about 13 percent in the final three months of last year from the same period in 2019, with revenue down about 17 percent. The company lost nearly $2 billion over the course of 2021, an improvement over its nearly $9 billion loss in 2020, both of which were offset by billions of dollars in federal aid to pay workers. The airline ended last year with about $15.8 billion in cash on hand.
The airline had spent the pandemic simplifying its fleet, replacing older, expensive planes with newer, more efficient ones. As a result, American’s capital spending in 2022 and 2023 is expected to be about half of what it was in the years leading up to the pandemic, it said.
The virus isn’t the only threat airlines have faced recently. After recovering from their holiday mess last week, the industry faced another potentially major disruption this week: an expansion of 5G cellular service that airlines warned could interfere with flight safety devices. The crisis was averted when wireless carriers agreed not to deploy 5G near some airports at the industry’s request.
