American Airlines reported first-quarter revenues of $12.6 billion on Thursday.
American Airlines reported a $312 million first-quarter loss for 2024 on Thursday.
The Fort Worth-based airline, which had to adjust for costs associated with new labor contracts, took $86 million in charges for one-time events including expenses from new labor deals. American’s operating expenses went up to almost 7%, including an 18% rise in salaries and other expenses.
The first quarter, however, didn’t include the up-front costs of American’s new pilot agreement, which the company included in the fourth quarter of 2023. The agreement raised pilot pay by more than 40% over four years.
American reported first-quarter revenue of $12.6 billion, an increase of 3.2% from a year earlier. Of that figure, $11.5 billion was passenger revenue, $187 million in cargo revenue and $925 million was for other revenues, like American’s AAdvantage card program and airport lounges.
“While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets,” American’s CEO Robert Isom said in a release. “Our team is running a fantastic operation, driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet.”
Analysts at Raymond James said that while American missed first-quarter expectations, the second-quarter guide is looking strong. But not as strong as competitors, researchers said.
Melius Research reported similarly that the airline anticipates the next quarter to be stronger.
“American’s path to closing the margin gap to Delta & United is largely a function of revenue as they continue to execute on the cost side (relatively) given a strong operation and consistency in capacity planning,” the report said. “Again, American falls into many of the buckets investors like, so if they are able to take advantage of other airlines that are struggling, it would elevate the story further.”
American, like other major airlines, is feeling the pressure of plane manufacturer Boeing Co.’s issues in delivering new aircraft orders. The delay in deliveries follows a series of safety issues plaguing the aircraft manufacturer, such as January’s Alaska Airlines blowout that left a gaping hole in the side of a Boeing 737 Max 9 fuselage. The blowout continues to make headlines, and the Federal Aviation Administration opened an investigation into Boeing.
Boeing delivery delays have impacted mainline capacity production, however, the airline reported that those delays have been offset by being more efficient with regional planes.
“Aircraft delivery delays are impacting the entire industry, but they are not having the same impact on American as other carriers, since we are not as dependent on new aircraft deliveries as most of our peers,” said Devon May, chief financial officer at American.
Isom said he’s talked to “everyone at Boeing” that he could with the same message: “Get your act together.”
“I can’t tell you if they’re making progress or not, because it’s all actions that matter, not words, and we’re continuing to work with them,” Isom said. “We’ll do everything we can to support Boeing. We need them to be successful in the long run.”
Isom told the Fort Worth Chamber of Commerce in March that the rebound in air travel traffic “bodes well for the future,” citing increased travel demand.
Looking ahead to summer, Isom said American is focused on safety, reliability and a great experience for customers.
“We don’t like reporting a loss,” Isom said. “That’s a challenge for us. It’s also an opportunity. As we look forward, we are encouraged by what we see in terms of industry dynamics, and also by those things that we’ve identified in the first quarter that we can go and address.”