This is shocking. At a time when most airlines are reporting even modest gains for the quarter, American Airlines suffered a huge loss.
American posted its third quarter results this week, and it included a surprising $545 million loss.
The airline said its revenue was not as high as it expected, labor costs were higher, and it had to cover the increase in a new contract for its pilots.
CEO Robert Isom seemed both angered and chagrined during a conference call with Wall Street analysts.
“We know there are things that we could have done differently over the past summer that we're going to make sure that we are addressing in terms of where we are flying and how we are doing it,” Isom said. “We're going to fly where we make money.”
American was forced to cut its estimate for full year share prices to between $2.25 and $2.50, down from a previous forecast of $3 to $3.75 per share. Higher fuel prices were also a contributing factor.
American’s two main competitors, United and Delta, both turned a profit in the third quarter and took advantage of the peak summer travel season. Revenue for the quarter was flat compared to last year, which is surprising since most airlines made money coming out of the pandemic.
American Airlines planes at Miami International Airport. (photo by Patrick Clarke)
But executives for American Airlines said that demand for travel remains high, and they expect a strong fourth quarter highlighted by holiday travel.
Ironically, American made almost $500 million in profit in the same quarter last year. But, they noted, they didn’t have to pay almost $1 billion in pilot contracts last year.
American's chief financial officer, Devon May, said United and Delta also added more flights that increased revenue.
Still, the loss of more than half a billion dollars must come as a jolt to shareholders.
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