DALLAS — Two airlines based in North Texas reported their first-quarter earnings on Thursday morning.
Dallas-based Southwest Airlines reported a first-quarter net income of $116 million. This comes after reporting a loss in the same period a year earlier.
Southwest Airlines is, however, the first major U.S. airline to report a profit since the pandemic started, the Associated Press reports.
Chairman of the Board and Chief Executive Officer Gary Kelly said the company benefited from temporary cost relief as a result of PSP Extension proceeds during the first quarter of 2021.
Without federal payroll aid for airlines, however, Southwest would have lost $1 billion. Kelly said this offset a portion of salaries, wages, and benefits expenses, which resulted in a profit of 19 cents per share.
"The payroll support from the federal government has allowed Southwest to preserve its 50-year history without involuntary layoffs or furloughs, an achievement unprecedented in the U.S. airline industry," Kelly said.
Excluding the benefit of PSP Extension proceeds and other special items, the company's first-quarter 2021 net loss was $1.0 billion, or $1.72 loss per diluted share, according to the report.
Kelly, however, went on to share his optimism and said travel demand among customers is improving. He credited COVID-19 vaccinations as playing a role in this.
"While the pandemic is not over, we believe the worst is behind us, in terms of the severity of the negative impact on travel demand. Vaccinations are on the rise, and COVID-19 hospitalizations in the United States are down significantly from their peak in January 2021," Kelly said.
He said, as a result, Southwest is seeing steady weekly improvements in domestic leisure bookings, which began in mid-February of this year.
As of March 31, the airlines' total liquidity was $15.3 billion, consisting of cash and short-term investments of $14.3 billion and a fully available revolving credit facility of $1 billion, according to the report.
American Airlines first-quarter earnings results for 2021
Fort Worth-based American Airlines reported first-quarter revenue of $4 billion Thursday. According to the report, this is down 53% year over year on a 39% year-over-year reduction in total available seat miles.
The airline also reported a $1.3 billion first-quarter net loss. On a per-share basis, American Airlines said it had a loss of $1.97. Losses, adjusted for non-recurring gains, were $4.32 per share.
"Our team has shown up every day throughout the pandemic and served more customers than any other airline. That focus has served as our inspiration and positions us well as even more customers return to the skies," said American’s Chairman and CEO Doug Parker.
American is slashing costs to ride out the pandemic. It is delaying the delivery of 23 new planes as it waits for air travel to recover from the pandemic. The airline says it has reduced 2021 costs by more than $1.3 billion, including a new round of voluntary buyouts that will result in 1,600 employees leaving the company.
Parker, however, echoed Kelly's optimism with travel demand improving in the U.S.
“Looking forward, with the momentum underway from the first quarter, we see signs of continued recovery in demand. We remain confident the network enhancements, customer-focused improvements, and efficiency measures we’ve put into place will ensure American is well-positioned for the recovery," he said.
According to the earnings report, the airlines raised $10 billion through debt offering backed by the AAdvantage program and used a portion of the proceeds to prepay in full the secured loan from the U.S. Department of the Treasury.
Earlier this week, the airlines announced in a memo that all of the pilots that were "recalled" during the COVID-19 pandemic will be returning to work.
The company said it plans to also resume hiring pilots this fall with about 300 new hires expected by the end of the year and another 300 by the end of 2022. American Airlines credits its strong spring season after the coronavirus upended travel plans across the globe.
The airline ended the first quarter with approximately $17.3 billion of total available liquidity. The company expects to end the second quarter with approximately $19.5 billion in total available liquidity.
The Associated Press contributed to this report.