US Airlines Report Mixed Q2 Results, 'Hopeful' for Continued Recovery
Southwest Airlines reported its second-quarter 2021 results on Thursday, posting operating revenues of $4 billion, up 297.6 percent year-over-year but down 32.2 percent compared with the pre-pandemic second-quarter 2019.
The low-cost carrier also reported a net income of $348 million, which it said was driven by a $724 million offset of salaries, wages, and benefits expenses related to the receipt of Payroll Support Program (PSP) proceeds under COVID-19 relief legislation. Excluding special items, Southwest posted a second-quarter net loss of $206 million. The carrier also generated a second-quarter operating cash flow of $2 billion and a free cash flow of $1.9 billion.
"Second-quarter 2021 marked an important milestone in the pandemic recovery as leisure travel demand surged. We generated net income in June 2021, representing our first monthly profit without taking into account the benefit of temporary salaries and wages cost relief provided by PSP proceeds, since the negative effects of the pandemic began in March 2020," said CEO and Chairman of the Board Gary Kelly. "Compared to the last four quarters, second-quarter 2021 operating revenues significantly improved, decreasing 32.2 percent compared with second-quarter 2019. June 2021 operating revenues decreased 20.7 percent, compared with June 2019.
Monthly operating revenue trends improved sequentially throughout the quarter. Leisure passenger traffic in June 2021 rebounded above June 2019 levels, while passenger fares were comparable with June 2019. Based on current bookings, leisure passenger traffic and fares in July are expected to trend higher than July 2019 levels."
"While the rapid ramp-up in June travel demand provided stability to our financial position, it has impacted our operations following a prolonged period of depressed demand due to the pandemic. Therefore, we are intensely focused on improving our operations as we restore our network to meet demand," Kelly added.
The company points out that "business revenues continue to lag leisure revenue trends" but says it's encouraged by the improvement in the second quarter of 2021 and weekly bumps thus far in July.
"Based on our current booking trends and cost outlook, we are hopeful to be profitable, both on a GAAP and non-GAAP basis, again in third and fourth quarter 2021. Should the pandemic negatively affect our current trends, we are prepared to manage through it," added Kelly, who will transition to the role of Executive Chairman in February 2022, opening up the CEO role for Executive Vice President Bob Jordan.
American Airlines also announced its second-quarter 2021 results on Thursday, revealing a second-quarter net profit of $19 million and a net loss of $1.1 billion, excluding special items. Second-quarter revenue reached $7.5 billion, up 87 percent sequentially from the first quarter of 2021, American announced.
"We have taken a number of steps to solidify our business through our Green Flag Plan and it shows in our second-quarter results," said American’s Chairman and CEO Doug Parker. "We have reshaped our network, simplified our fleet and made our cost structure more efficient, all to create an airline that will outperform competitors and deliver for customers. The green flag has dropped and we are ready thanks to the tremendous efforts and dedication of the American Airlines team."
United Airlines reported its second-quarter 2021 financial results earlier in the week, saying that it expects positive adjusted pre-tax income in the second half of the year as travel demand rebounds. The airline's second-quarter 2021 capacity was down 46 percent compared to the same period in 2019. United reported a net loss of $0.4 billion and total operating revenue of $5.5 billion, which was down 52 percent compared to the second quarter of 2019.
Earlier this month, Delta Air Lines stated it "achieved significant milestones in the quarter including a solid pre-tax profit in the month of June, positive free cash flow for the June quarter, and our people and our brand being recognized with the top spot in the J.D. Power 2021 Airline Study."
Delta reported adjusted operating revenue of $6.3 billion, a figure that excludes refinery sales and marked a decline of 49 percent on 39 percent lower sellable capacity compared to the June quarter of 2019. The carrier also confirmed an adjusted pre-tax loss of $881 million excluding $1.5 billion of benefit related to the first and second payroll support program extensions as well as mark-to-market adjustments on its investments.
"Domestic leisure travel is fully recovered to 2019 levels and there are encouraging signs of improvement in business and international travel," said Delta CEO Ed Bastian. "With the recovery picking up steam, we are making investments to support our industry-leading operation. We are also opportunistically acquiring aircraft and creating upside flexibility to accelerate our capacity restoration in 2022 and beyond in a capital-disciplined manner."
S: Travel Pulse
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