U.S airlines report strong Q1 driven by high customer demand

The largest airlines in the United States reported that their first quarter financial results indicate strong pent-up travel demand and higher prices would result in a more positive outlook for the remainder of 2023.

American Airlines forecasted that second-quarter profit would surpass estimates as demand stays strong despite an uncertain economy. The company reported first-quarter net income of $10 million and record revenue of $12.2 billion, representing a 37 percent jump from 2022.

The carrier generated a record operating cash flow of $3.3 billion and a record free cash flow of $3 billion in the first quarter. American CEO Robert Isom said the company would “remain focused on reliability, profitability and strengthening the balance sheet” for the remainder of 2023.

As for Delta, the first quarter of 2023 saw operating revenue hit $12.8 billion, operating cash flow top $2.2 billion and payments on debt and finance lease obligations reach $1.2 billion.

The airline also unveiled June quarter and full-year outlooks, with total revenue expected to increase by 15-17 percent compared to the same periods in 2022 and operating margin forecast to improve by 14-16 percent.

“With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2 billion,” Delta CEO Ed Bastian said.

United Airlines grew total operating revenue by 51.1 percent compared to 2022 and total revenue per available seat mile (TRASM) by 22.5 percent. Cost per available seat mile (CASM) also increased by four percent.

Strong operational reliability produced available seat miles (ASMs) 23.4 percent higher than last year, while company officials remained confident that 2023 would continue to yield positive financial results.

While most carriers thrived, Southwest Airlines reported a wider-than-expected first-quarter loss due to a “pre-tax charge related to mass cancellations in December and flagged 20 fewer deliveries of the MAX jets this year from Boeing,” according to Reuters.com.

Despite the issues, the carrier forecast “solid profits” in the current quarter on strong summer bookings despite high labor and fuel expenses still weighing on the industry. CEO Bob Jordan said “demand for domestic air travel remains strong.”