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US airlines say they’ve reached a turning point in recovery

DALLAS (AP) – United States (US) airlines said they have hit a turning point – after a lousy first quarter, they expect to be profitable as Americans return to travel in the biggest numbers since the start of the pandemic.

American Airlines is the latest carrier to give a rosy outlook for the rest of 2022. American said on Thursday that although it lost USD1.64 billion in the first quarter, sales hit a record in March, and the company expects to earn a profit in the second quarter.

American’s upbeat view echoed similar comments from Delta Air Lines and United Airlines, which both predicted recently that they will earn full-year profits despite big losses in the first quarter.

Air travel was subdued in January and February due to the Omicron variant. But travellers came back in March, and airline executives believe that Americans are eager to travel this summer and won’t be discouraged by higher airfares.

Industry officials attributed rising airfares to a combination of covering higher fuel costs, a limited number of flights, and strong demand.

The recovery is being powered by leisure travellers, but the airlines said they are seeing more business travellers.

American said overall business travel is 80 per cent of pre-pandemic levels, dragged down by corporate travel, which is only 50 per cent of 2019 levels. Along with higher revenue, however, airlines face higher costs for fuel and labour. American’s fuel bill more than doubled from a year earlier, and payroll costs rose more than 15 per cent.

American reported a bigger first-quarter loss than a year ago, when it lost USD1.25 billion.

The airline said that excluding special items it lost USD2.32 a share. Revenue rose to USD8.9 billion.

Alaska Air Group, the parent of Alaska Airlines, said on Thursday that it lost USD143 million in the first quarter, compared with a USD131 million loss a year earlier. Revenue more than doubled to USD1.68 billion but was down 10 per cent from the same quarter in 2019.

The Seattle-based carrier forecast that second-quarter revenue will be five per cent to eight per cent higher than in the same quarter of 2019.

Chicago-based United Airlines Holdings reported on Wednesday a USD1.38 billion loss for the first quarter but said it expects to return to profitability in the April-to-June quarter. Revenue of USD7.67 billion was up from a year ago but down 21 per cent from early 2019.