People still want to spend money on tourism despite the growing concerns of a recession.
That was the key finding from the fourth-quarter earnings season for the U.S. airline sector, which concluded this past week with the release of the final major carriers' results.
The next to report record income was American Airlines, which cited rising demand since the height of the pandemic.
For the time being, this trend does not appear to be slowing down.
The most recent data were released on Thursday along with the earnings for the fourth quarter of 2022 from four major airlines.
American announced record fourth-quarter revenue and reported a net income of $803 million, easily exceeding Wall Street projections.
Despite operating at 6.1% less capacity, the Fort Worth-based airline reported that it made 16.6% more money during the quarter than it did during the same one in 2019.
In a statement made on a conference call to discuss the company's quarterly financial results, American Airlines CEO Robert Isom said, "This is our best-ever post-holiday booking period with broad growth across all businesses and travel periods."
"Residential travel and short-haul foreign travel continue to be in high demand.
We estimate that the robust demand environment will persist in 2023 and that the demand for long-haul international travel will continue to rise.
Competitors Delta Air Lines and United Airlines, who also reported record profits and optimistic 2023 forecasts, had results similar to American's in the fourth quarter.
Southwest Airlines, the second major airline serving the Dallas-Fort Worth area, didn't enjoy such strong financial results.
After its holiday-related disaster, Southwest said it expected demand to build up again.
However, the airline disclosed a $220 million deficit for the fourth quarter.
The catastrophic collapse that started around Christmas and continued into the New Year was a major topic of discussion on the carrier's earnings call.
Executives apologized for the operational blunder.
On the call, Southwest CEO Bob Jordan stated, "First and foremost, I want to apologize once more to our customers and our workers for the impact the operational disruption had on them and on their Christmas plans."
We have a laser-like focus on lowering the possibility of another operational event of that nature happening.
The airline incurred operating costs of almost $390 million as a result of the incident, which led to the cancellation of close to 17,000 flights.
Tammy Romo, Southwest's CFO, claims that the majority of those costs were used to reimburse customers.
About 95% of those refund claims, according to Jordan, will soon be fulfilled by the airline.
To determine whether the airline's schedule was too ambitious, the Department of Transportation has opened an investigation into Southwest airline's collapse.
Southwest claimed to be assisting the DOT with its inquiry.
Jordan continued by stating that 25% of customers who received 25,000 Rapid Rewards points as a result of the mishap have already made reservations for upcoming flights with the airline.
While some travelers utilized points, others paid cash.
On the phone call, Jordan stated, "I take that as a show of confidence that they recognize that we messed up there.
"We tried everything we could to fix it."
But according to executives, bookings have slowed down in January, and Southwest is still reeling from its holiday debacle.
Southwest CCO Ryan Green claimed that the decline in reservations was only confined to January and the first half of February as a result of the incident's "hangover" effect.
Both Alaska Airlines and JetBlue, the other two significant airlines that released quarterly earnings on Thursday, expressed optimism about the demand outlook for 2023.
Analyst predictions were beaten by both businesses.
Strong demand from leisure travelers appears to be driving the rise.
Travel for pleasure has recovered from the epidemic considerably more quickly than travel for business.
Looking further out, we are eager to build on last year's record performance as we anticipate another strong year of revenue growth ahead of us, supported by strong leisure demand and numerous network and commercial initiatives, said JetBlue COO Joanna Geraghty.
That is not to imply that there aren't any ominous clouds gathering over the sector.
The pilot scarcity has put pressure on the business, particularly on regional carriers, which have increased compensation and labor costs as a result.
Delivery of everything from new airplanes to replacement parts has been delayed by problems with the supply chain.
Some airlines are worried about further interruptions as a result of resurgent concerns over aging aviation infrastructure brought on by the recent failure of the Federal Aviation Administration system.
The comments made by United CEO Scott Kirby last week that it's challenging for airlines to run like it's 2019 given the strains the sector has been under since the outbreak garnered headlines.
After a large number of workers left the industry due to the pandemic or took buyouts, many airlines have only lately resumed hiring at appropriate levels.
Financial analysts have been speculating for months about the potential for a U.S. recession, something that might scupper the industry's comeback.
However, as of right now, airlines continue to be rather upbeat about 2023.
In the previous year, "we surmounted numerous hurdles together, and we made amazing progress in recovering the business coming out of the epidemic," JetBlue CEO Robin Hayes said.
And with a focused plan to keep bolstering our foundations, both operationally and financially, we're ready to further expand on that success here in 2023.
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