2 min read.Updated: 22 Jul 2021, 06:24 PM ISTDAVE SEBASTIAN, The Wall Street Journal
The two carriers were among the hardest-hit by cancellations and delays last month as they moved to restore operations amid a rebound in air travel
American Airlines Group Inc. and Southwest Airlines Co. said recent travel recovery has been a boon as they work to restore operations after the Covid-19 pandemic crushed the industry last year.
American on Thursday said domestic leisure and short-haul international travel picked up pace as vaccinations increased. It said revenue from domestic business flights has recovered to 45% of 2019 levels and that it sees first signs of improvement in long-haul travel.
Southwest generated its first monthly profit in June without taking into account the benefit of temporary salaries and wages cost relief provided by proceeds from the Payroll Support Program since the onset of the pandemic, Chairman and Chief Executive Gary Kelly said. “Second quarter 2021 marked an important milestone in the pandemic recovery as leisure travel demand surged," he said.
Air carriers are racing to keep up as travel picks up for the summer, with newly vaccinated travelers flocking to airports in even greater numbers than many airline executives were expecting. That rebound has posed challenges for the industry amid staffing constraints at airlines and airports, severe weather that has scrambled flight schedules and tense standoffs with unruly passengers during some flights.
American and Southwest were among the hardest-hit by cancellations and delays last month, following which both airlines took steps to stabilize operations ahead of the busy July 4 weekend. Southwest offered flight attendants and ground staff double pay to work extra shifts over the holiday period. American trimmed back schedules to build in room for recovery from potential hiccups.
“While the rapid ramp up in June travel demand provided stability to our financial position, it has impacted our operations following a prolonged period of depressed demand due to the pandemic," Southwest’s Mr. Kelly said. “We are intensely focused on improving our operations as we restore our network to meet demand."
Despite recovering demand, full recovery for airlines remains a long way off. Southwest’s operating revenue for the three months ended June 30 was $4 billion, nearly quadrupling from a year ago but down 32.2% from the same quarter in 2019. It turned a profit of $348 million for the second quarter, compared with a loss of $915 million in the prior-year period.
American turned a profit for the second quarter of $19 million on operating revenue of $7.48 billion. It said it expects third-quarter revenue to be down about 20% from the same period in 2019.
Delta Air Lines Inc. last week reported its first quarterly profit since the pandemic began, boosted by about $1.5 billion in government aid and a summer rebound in vacation travel.
Airlines could face fresh challenges as the summer wanes. While executives say they are seeing strong bookings into fall, leisure travel is likely to ebb once schools are back, and it is unclear how quickly business travel will return. At the same time, prices for fuel—typically airlines’ largest expense after labor—are climbing. Many countries have eased restrictions and now allow vaccinated American tourists to enter, but the U.S. has yet to lift most travel restrictions.