Major US airlines’ revenue in Q2 2022 exceeds the pre-pandemic levels

Despite operational hurdles and decade-high inflation, the airline industry has seen sizable improvement in international travel demand and major air carriers have returned to profitability. Many airlines saw their revenue at levels near or even above those before the COVID-19 pandemic in the second quarter and are rather optimistic about their Q3 and Q4 performance.

TradingPedia‘s editorial team decided to analyse the financial performance of the 4 major US airlines in the second quarter of 2022 – American Airlines (AAL), United Airlines (UAL), Delta Air Lines (DAL) and Southwest Airlines (LUV). The information gathered through our analysis allows to draw a conclusion about the overall development of the domestic airlines industry in the U.S.

Let us now take a closer look into financial results and guidance provided by the top 4 US airlines.

American Airlines’ results and guidance

American Airlines (NASDAQ: AAL) reported the highest quarterly operating revenue in its business history in Q2 of 2022 – $13.422 billion, or 12.2% higher than the revenue figure reported in Q2 of 2019. Domestic, Latin America and Atlantic passenger revenues all exceeded Q2 2019 levels amid a robust air travel demand environment. The air carrier generated those results by flying 8.5% less capacity compared to the second quarter of 2019.

“Domestic leisure travel has been a key revenue driver for American and there have also been improvements in second-quarter corporate and government revenue. International travel demand has also improved steadily and will probably continue improving in upcoming quarters, especially after the COVID-19 testing requirement for inbound travel to the United States has been lifted,”

-Brian McColl, analyst at TradingPedia, said.

American also reported a quarterly net income, excluding special items, for the first time since the beginning of the pandemic. Second-quarter adjusted net income came in at $533 million ($0.76 per share), which compares with a net income of $810 million ($1.82 per share) for the second quarter of 2019.

Meanwhile, second-quarter adjusted operating expenses, which exclude special items and fuel, were reported at $8.390 billion, up from $8.204 billion in Q2 of 2019.

And, adjusted non-fuel costs per available seat mile were 11.8% higher compared to the second quarter of 2019.

Load factor, or the percentage of available seats occupied by passengers, was at 86.9% in Q2, or 0.3% higher than the Q2 2019 level.

American Airlines’ results for the first six months of 2022 in comparison with the respective period of 2019 are presented in the table below.

American Airlines expects its third-quarter operating revenue to be between 10% and 12% higher compared to Q3 of 2019, while its third-quarter available seat miles (capacity) is expected to be between 8% and 10% lower than the Q3 2019 level.

The airline expects to remain profitable in Q3.

United Airlines’ results and guidance

United Airlines Holdings Inc (NASDAQ: UAL) reported a second-quarter net income, excluding special items, of $471 million ($1.43 per share), which translates into a 57.2% drop compared to the Q2 2019 level.

Its GAAP net income was reported at $329 million, or the first quarterly profit since the start of the pandemic without the help of federal payroll aid that expired nearly 1 year ago.

United’s second-quarter operating revenue was reported at $12.112 billion, or a 6.2% increase over Q2 of 2019. Domestic passenger revenue rose 9.3%, European passenger revenue went up 7.4% and Latin American passenger revenue surged 22.6% compared to Q2 of 2019. The company generated those results by flying 15% less capacity compared to the second quarter of 2019.

Total revenue per available seat mile grew 24.3% over Q2 of 2019.

Meanwhile, second-quarter adjusted operating expenses were reported at $7.275 billion, up from $7.272 billion in Q2 of 2019.

Additionally, United’s adjusted non-fuel costs per available seat mile were 17% higher compared to the second quarter of 2019, as it operated with lower capacity.

Passenger load factor was at 86.7% in Q2, or 0.7% higher than the Q2 2019 level.

United Airlines’ results for the first six months of 2022 in comparison with the respective period of 2019 are presented in the table below.

United Airlines expects its third-quarter operating revenue to be 11% higher compared to Q3 of 2019, while its third-quarter available seat miles (capacity) is expected to be 15% lower than the Q3 2019 level.

In 2023, the airline plans to expand capacity no more than 8% compared to 2019. Previously, it had forecast a 20% growth.

Third-quarter total revenue per available seat mile is expected to increase between 24% and 26% over the same period of 2019.

United also expects third-quarter operating expenses per available seat mile, excluding fuel & oil, special items and profit sharing, to be 16% to 17% higher compared to Q3 of 2019.

Delta Air Lines’ results and guidance

Delta Air Lines Inc (NYSE: DAL) reported a second-quarter net income, excluding special items, of $921 million ($1.44 per share), which represents a 40% drop compared to Q2 of 2019.

Second-quarter adjusted operating revenue was also lower in comparison with 2019, down 1% to $12.311 billion.

GAAP operating revenue in the second quarter, however, was 10% higher than the Q2 2019 level, at $13.824 billion. Delta’s domestic passenger revenue rose 3% and international passenger revenue was 81% recovered compared to Q2 of 2019. There also was a marked improvement in Atlantic travel. Those results were generated by flying 18% less capacity compared to the second quarter of 2019.

Meanwhile, second-quarter adjusted non-fuel costs were reported at $7.516 billion, matching Q2 2019 levels.

Yet, Delta’s adjusted non-fuel costs per available seat mile rose 22% from the second quarter of 2019 due to “lower capacity, higher selling-related expenses and investments in operational reliability.”

Passenger load factor was at 87% in Q2, or 1% lower than the Q2 2019 level.

Delta Air’s results for the first six months of 2022 in comparison with the respective period of 2019 are presented in the table below.

Delta Air Lines expects its third-quarter operating revenue to be between 1% and 5% higher compared to Q3 of 2019, while its third-quarter available seat miles (capacity) is expected to be between 15% and 17% lower than the Q3 2019 level, as the company faces backlogs in training new personnel.

The airline expects third-quarter operating expenses per available seat mile, excluding fuel & oil, special items and profit sharing, to be approximately 22% higher compared to Q3 of 2019.

Southwest Airlines’ results and guidance

Southwest Airlines Co (NYSE: LUV) reported an all-time high quarterly net income, excluding special items, of $825 million ($1.30 per share), which represents an 11.3% increase compared to Q2 of 2019.

Southwest also reported all-time high quarterly operating revenue of $6.728 billion in Q2, a 13.9% surge compared with Q2 of 2019. Robust leisure demand, especially in June, led to more passenger bookings, while contributing results.

On the other hand, second-quarter operating expenses, excluding fuel & oil, special items and profit sharing, were reported at $3.838 billion, a 5.6% surge compared to Q2 of 2019. The increase in those expenses in Q2 came as a result of “continued unit cost headwinds from operating at suboptimal productivity levels, inflation in labor rates and airport costs, and accruals for expected future contractual wage rate increases.”

Load factor was at 87.1% in Q2, or 0.7% higher than the Q2 2019 level.

Southwest’s results for the first six months of 2022 in comparison with the respective period of 2019 are presented in the table below.

Southwest expects its third-quarter operating revenue to be between 8% and 12% higher compared to Q3 of 2019, while its third-quarter available seat miles (capacity) to match the Q3 2019 level.

Cost inflation is expected to continue weighing on profitability in Q3, more precisely due to higher rates for labor, benefits and airports. The company expects third-quarter operating expenses per available seat mile, excluding fuel & oil, special items and profit sharing, to be between 12% and 15% higher compared to Q3 of 2019.

For the full-year, Southwest forecasts 4% lower capacity compared with 2019 levels and 12% to 16% higher operating expenses per available seat mile.

“Despite overall improvement, rising costs will continue to be a drag on profitability in the upcoming quarters. This, coupled with operational challenges that limit the airline industry’s capacity as well as the rising possibility of a global recession remain major hurdles, which companies will have to overcome,”

-McColl noted.