American’s Q1: Labor Costs Up, Profit DownAmerican Airlines lost $312 million in the first three months of the year as it saw labor costs rise 18%, or nearly $600 million from a year ago. American expects to return to the black in Q2, to the tune of between $1.15 and $1.45 per share.
The carrier earned a cool $12.6 billion in gross revenue, including $11.5 billion in passenger revenue. It’s two biggest expenses were labor at nearly $4 billion and fuel at $3 billion, with the pair accounting for more than half the carrier’s costs for the quarter. Its domestic load factor was up 2.2 points but its yield dropped over 5% compared to 2023, while international load stayed almost flat, with the yield dropping by more than 6%.
AA ended the quarter with $703 million in cash, which if you believe the internet these days, most of which is due to CEO Robert Isom as a bonus.
American reported weakness in its managed corporate business. Look for more on that Monday right here on crankyflier.com.
Southwest Loses Money, Four Destinations Southwest’s Q1 loss was $231 million and four airports, announcing in its Q1 earnings that it is ending service to Bellingham, Cozumel, Houston/IAH, and Syracuse. It’s a market exit for three of the four cities, but Southwest’s large presence across Houston at Houston/Hobby will still allow those who prefer salty death mix to stroopwafels to trudge across town to get it.
The loss came on a first quarter record figure of $6.3 billion gross revenues, most of which came in the form of EarlyBird sales that still ended up with customers in the B boarding group. Despite the first quarter loss, Southwest did have a profitable March, and like everyone else, it expects the remainder of the year to be better. As it looks to readjust future schedules and operations due to delivery delays from an unnamed U.S.-based aircraft manufacturer. The airline expects to retire just 35 airplanes this year instead of 49, and for rest-of-the-year growth to be below current economic trends.
In another effort to control costs, Southwest expects to end 2024 with about 2,000 fewer employees than at the end of 2023. This will come from not backfilling some positions that will leave their roles voluntarily this year while also forcing approximately five employees per station to have a Festivus-style Feats of Strength battle where the only way to keep your job is to pin the other four before one of them pins you.
Southwest FAs Ratify New Labor AgreementSouthwest Airlines flight attendants are the highest paid in the industry — for now — as they ratified their new agreement with the carrier, and it calls for immediate raises and some back pay.
Cabin crew at Southwest will see a 22% increase in salary effective May 1 and another $364 million in back pay to be paid out based on seniority at the carrier. The new contract also includes annual 3% raises on May 1 through 2027. The union also achieved paid parental leave, a first in the industry. Parents wishing to take advantage of this must sign up exactly 24 hours before the birth of their child and will be granted leave in the order in which they sign up.
Other items earned by FAs in this round of negotation include premium pay for extended duty days; additional holiday pay for Memorial Day, July 4th, and Labor Day; a provision allowing for hazard pay when working a flight between any NYC-area airport and South Florida; and a fine system for FAs caught telling terrible jokes over an aircraft’s PA system.
Delta Raises Pay for Most EmployeesDelta Air Lines on Monday announced raises for many of its frontline staff. The simple child might claim the carrier is working to take care and reward its employees, but the wise child might say it’s another effort at staving off unionization efforts at the airline.
This is the third across-the-board raise for Delta since 2022, and it includes a 5% bump for flight attendants and ground staff plus an increase in starting salaries for most employees to at least $19 per hour. The pay bumps will go into effect on June 1 and will ultimately cost the carrier about $500 million per year — or roughly the cash equivalent to redeem SkyMiles for two round trips in Delta One between the U.S. and Europe.
In addition to those at the airport, employees at Delta headquarters will receive raises from a merit pool consisting of 5% of current salaries, with actual payouts ranging between 3% and 7% per employee.
United, Boeing Reach Compensation AgreementUnited Airlines entered into an agreement with Boeing to compensate the carrier for money lost during the grounding of the B737-9 MAX grounding and the delay in the certification of the MAX 10.
United ended up posting a small loss during Q1 which it attributed directly to losses due to the MAX 9 grounding — now that it’s come to an agreement with Boeing, it is expected raise a banner in the United Center to retroactively acknowledge a profit for the first three months of the year. Despite Alaska receiving about $160 million cash from the manufacturer, United is not expected to receive cash, but store credit instead.
United will be able to use the credit for future airplane purchases or at the gift shop in Boeing’s corporate headquarters that comes at the end of the factory tour.
Air Canada added a 4% increase of seats for domestic and transborder service this summer.
AirAsia Cambodia has an airplane now.
Alaska is adding 4x weekly service on a gaping hole in our nation’s air travel, as more service between Las Vegas and Southern California is exactly what we all needed.
American blinked in its showdown with travel agents, delaying its announcement of its “preferred agencies” to the summer.
ANA is beginning a new codeshare agreement with Air India effective May 23.
Asiana‘s flight between Seoul/ICN and Osaka is a dream.
Avelo is adding service on the criminally underserved market between Orlando and Miami.
British Airways resumed flying to Abu Dhabi this week for the first time since the pandemic.
Condor‘s first new A320 earned its stripes. Literally.
Delta is bringing back a popular credit card design. It is also bringing back service between New York/JFK and Lagos on December 1, along with other aircraft changes on its service to Africa.
Etihad has resumed daily A380 service to New York/JFK.
Hawaiian expects to have its entire A321neo fleet back in service soon.
Icelandair‘s cargo division is back in the black, just as we all predicted.
JetBlue looks to improve the IFE experience.
Korean is considering a purchase of as many as 10 B777x aircraft.
Lufthansa has a new lounge concept coming, and it’ll debut the first one in Newark this summer.
Lufthansa City Airlines, the 83rd brand developed by Lufthansa, began selling tickets this week and will begin revenue flights in June.
Mexicana wants new airplanes, but it needs $1.2 billion first.
MYAirline is no longer an airline.
Qantas is retrofitting a first airplane with international Wi-Fi capability.
SAA needs money.
Transavia might leave Amsterdam. It also might not.
T’way is t’wying to join Star Alliance, as is Air Premia.
United will resume flying to Tel Aviv next week.
WestJet is expanding its codeshare agreement with Korean.
Wizz Air expects 2024 to be a good one.
When you get a bigger bed, you get more bed room, but less bedroom, all at the same time.
