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American, United Report Net Losses, Project Capacity Again Lower than 2019
U.S. airline industry earnings season continued Thursday morning as rival legacy carriers American Airlines and United Airlines released figures from the fourth quarter and all of 2021. The pair of airlines followed competitor Delta Air Lines’ lead with a beat on the top and bottom lines.
United reported a total load factor — a measure of the number of passengers flown divided by available seats — of 72.2% for the full year 2021, falling behind 2019 by almost 12 percentage points. American during the same period posted a load factor of 75.3%. Both significantly lagged Delta, which last week said it had managed to fill approximately 78% of its seats.
The industry continues to reel from the Covid-19 pandemic, and a surge of the Omicron variant in the fourth quarter throughout the U.S. and the rest of the world, alike, hampered their goal of returning to sustained profitability. On an adjusted basis, United posted a net loss of $600 million during the fourth quarter, which after adjusting for one-time items remained a net loss of $500 million. Its Fort Worth, Texas-based competitor announced a $931 million net loss, adjusted to $921 million excluding special items.
Both airlines echoed Delta in warning of sustained downward pressure on load factors through the beginning of 2022, though expressed optimism for a busy spring and summer travel season, both in domestic and international markets. Passengers hoping to book international itineraries, however, may have to yield to travel restrictions in some parts of the world.
“The United team has been fighting through unprecedented obstacles to, once again, overcome the new and daunting challenges that Covid-19 is bringing to aviation, and I am grateful to each one of them for their commitment to taking care of our customers,” said United Airlines CEO Scott Kirby in a statement. “While Omicron is impacting near-term demand, we remain optimistic about the spring and excited about the summer and beyond. We look forward to beginning to return the Pratt & Whitney 777s to service this quarter and getting the full airline back to normal utilization — as we ramp up along with demand this year.”
Incoming American CEO Robert Isom expressed a similar sentiment in a press release shared before the markets opened Thursday. American, historically the legacy carrier with the most debt, is specifically looking to change that moving into the new year.
“We’re very proud of the way our team delivered throughout 2021,” Isom said. “Looking forward, our focus in 2022 will be to continue running a reliable airline, returning to profitability, and delivering on our long-term plan to deleverage the balance sheet.”
United also put specific focus on its 52 Boeing 777s using Pratt & Whitney engines, which it grounded after an uncontained engine failure on an aircraft leaving Denver in 2021. The airline said that, as it gradually ungrounds the aircraft moving into the first half of the year, it will experience significant aircraft utilization improvements.
United also said the airline expects to fly lower capacity — measured in available seat miles — in 2022 than it did in 2019. American did not make similar full-year guidance but said investors should look to first-quarter capacity being 8-10% lower than the same period in 2019.
Eyes now turn to American’s crosstown rival, Southwest Airlines, which will share its 2021 traffic and financial figures Jan. 27. With a more domestic-focused route network, Southwest will provide a different look at the industry than the one the three large legacy carriers have given in the past week.
Allegiant Air, another low-cost carrier with a domestic focus, shared recently its December and full-year traffic numbers, which showed the airline was flying more seats — measured by available seat miles — than at the end of 2019. The airline had similar struggles when it came to load factor, which declined nearly 4% compared to the same period two years prior.
American Airlines hosted its earnings call at 8:30 a.m., while United has its call at 10:30 a.m.
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