Close sidebar

US government aid sees major airlines boast second quarter profits

written by Hannah Dowling | July 23, 2021
A file image of American Airlines Boeing 737 MAX 8 N314RH. (Nathan Coats/Commons Wikimedia)
An American Airlines Boeing 737 MAX 8 (Nathan Coats/Commons Wikimedia)

US major carriers American Airlines and Southwest Airlines have both posted quarterly profits off the back of government support and a steady increase in domestic air travel demand.

American Airlines posted a US$19 million profit in its second-quarter results, a figure that would have fallen to a net loss of US$1.1 billion had government financial aid not been awarded to the carrier.

The figures come off the back of US$7.5 billion in revenue reported in the second quarter, as consumer confidence improves throughout the US.

Advertisement
Advertisement

Revenue jumped 87 per cent from American’s first-quarter results, and was nearly six times what it brought in over Q2 2020.

Further, the airline has managed to end its incessant cash burn, and has now returned to cash flow positive, now boasting a cash build of US$1 million per day.

Meanwhile, Southwest Airlines posted a US$348 million profit during its second-quarter results, again helped by US$724 million in offset salaries and benefits under the government’s Payroll Support Program and other government aid programs.

Excluding government assistance, the airline would have seen a net loss of US$206 million.

Southwest reported second quarter operating revenues of US$4.0 billion, increasing nearly 300 per cent over 2020 figures, however remains down 32.2 per cent compared with 2019.

PROMOTED CONTENT

Similarly to America, Southwest also reported a return to positive daily cash flow in the second quarter, currently sitting at around US$4 million per day, however due to poorer conditions at the beginning of the quarter, the airline still saw an average cash burn for the quarter of US$1 million per day.

Together, US airlines received over US$54 billion in government aid over the pandemic, which has helped push airlines back into profitability, over a year on from the beginning of the crisis.

American Airlines CEO Doug Parker said that the airline industry would not have been able to bounce back in line with demand had the government not provided such support.

“I can’t imagine how hectic it would be in terms of not just the airline industry but for our entire economy,” he said.

Parker said that the airline has seen a “quick and dramatic increase in bookings” in line with easing restrictions that continues to trend upwards.

According to TSA passenger thoroughfare figures, more than 1.8 million people are now passing through airports everyday, nearly hitting pre-pandemic figures, and almost three times the amount reported in 2020.

Earlier this month, more than 10 million domestic passengers travelled via air for the 4 July holiday weekend, again, more than three times the same number recorded in 2020.

TSA data suggested that a total of more than 10 million passengers travelled throughout the country between Thursday, 1 and Monday, 5 July, as passenger demand continues to increase off the back of a strong vaccine rollout in the country.

In fact, at 2,196,411 passengers, Friday, 2 July marked the busiest day for passenger travel since the beginning of the pandemic in March 2020.

Meanwhile, American Airlines reported a staggering 2.7 million passengers alone over the course of the weekend, a figure also three times higher than 2020.

“It’s always a busy one for the airline industry, but after a challenging year, this weekend proved that people are ready to travel again,” the airline said.

Leave a Comment

Your email address will not be published. Required fields are marked *

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year