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American Airlines has announced a significant loss of $545 million in the third quarter, a stark contrast to the substantial profits reported by its two closest competitors. This financial setback for American Airlines is primarily attributed to $983 million in expenses related to a newly negotiated labor contract with its pilots. In contrast, United Airlines and Delta Air Lines successfully secured similar deals with their pilots and each earned $1.1 billion during the same quarter.
One of the key contributing factors to American Airlines’ loss was a substantial 17% increase in labor costs, amounting to nearly $600 million. However, this was partially offset by lower fuel prices compared to the previous year.
When it comes to revenue, American Airlines’ performance remained relatively steady when compared to the previous summer. In contrast, United and Delta reported impressive revenue increases of 12% and 11%, respectively.
The airline industry is currently grappling with concerns over rising costs, particularly as fuel prices surge at a time when travel demand has started to wane. Although fuel prices remain lower than the previous year, American Airlines’ financial loss may exacerbate industry-wide concerns about mounting expenses.
United Airlines also raised concerns about rising fuel prices, leading to a less optimistic year-end forecast following a strong third quarter. Additionally, the suspension of flights to Tel Aviv due to the Israel-Hamas conflict impacted United’s performance.
American Airlines Group Inc., headquartered in Fort Worth, Texas, reported earnings of 38 cents per share when excluding special items, surpassing analysts’ expectations of 25 cents per share according to a FactSet survey. Nevertheless, the revenue of $13.48 billion slightly fell short of Wall Street forecasts.
During the quarter, American Airlines, which took on additional debt during the pandemic, managed to reduce its debt by $1.4 billion. In response to these financial updates, American Airlines’ shares experienced a modest 2% increase prior to the market’s opening. Company executives will further discuss these results with analysts and the media later on Thursday.
