American Airlines posts $545 million loss on higher labor costs in a time of big profits for rivals
FORT WORTH (CBSNewsTexas.com) – American Airlines is reporting a $545 million loss for the third quarter in contrast with the huge profits posted by its two closest rivals.
American said its results were dragged down by $983 million in charges related to a new labor contract with its pilots, but United Airlines and Delta Air Lines reached similar deals with their pilots and still earned $1.1 billion each in the quarter.
Labor costs at American jumped 17%, an increase of nearly $600 million, which was roughly offset by lower fuel prices than a year ago.
American's revenue was roughly flat with last summer, compared with 12% and 11% increases at United and Delta.
There are already concerns over rising costs for airlines as fuel prices surge at the same time that travel has begun to slow. Fuel prices are still lower than they were last year, but the loss at American could add to anxiety over burdensome costs across the industry.
Citing rising fuel prices on Wednesday, United Airlines gave a surprisingly weak end-of-year forecast after a solid third quarter, sending shares major carriers lower. United also noted the suspension of its flights to Tel Aviv because of the Israel-Hamas war.
American Airlines Group Inc., based in Fort Worth, Texas, said its earnings excluding special items worked out to 38 cents per share. Analysts expected 25 cents per share, according to a FactSet survey.
Revenue of $13.48 billion was slightly below Wall Street forecasts.
American, which took on new debt during the pandemic, said it paid down $1.4 billion in debt during the quarter.
Shares of American rose about 2% before the opening bell. Company executives will discuss the results with analysts and reporters later Thursday.