But the good news for airline investors turned out to be bad news for air passengers.
The amount passengers paid per mile to fly by airlines this quarter rose by just over 20% from 2019, by far the highest per mile fare paid since the start of the pandemic. The surge was driven by a combination of the industry’s lower capacity and strong demand for air travel.
These high fares have allowed airlines to raise revenue higher than they booked in the same quarter of 2019 despite reduced capacity.
American reported record second-quarter revenue of $13.4 billion, up 12% from 2019 levels, although throughput was down nearly 9%. United’s revenue grew by 6% compared to the same period in 2019, while capacity decreased by 15%.
Revenue growth helped carriers return to profitability.
The American earned $533 million in the quarter, excluding special items, in line with the forecasts of analysts polled by Refinitiv. That compares to a $1.1 billion loss a year ago, but far short of the $810 million the airline earned in the same period in 2019, the year before the pandemic.
On that basis, United made $471 million in the second quarter, compared to $1.3 billion lost the previous year. Those profits were less than half of what the airline earned in the second quarter of 2019. Unlike American, United fell short of analysts’ forecasts.
Among the reasons why profits could not keep pace with high revenues were higher costs, especially soaring fuel prices. Fuel is the second largest expense for airlines after labor costs.
Both airlines paid more than $4 a gallon for jet fuel during this period, almost double what they paid in 2019 and more than 70% more than what each was paying at the end of 2021.
While there were quarters during the pandemic when airlines reported positive net income, this was primarily due to the financial support they and the rest of the industry have received from the federal government over the past two years.
Excluding those payouts, American Airlines lost $16.4 billion from the start of 2020 to the first quarter of this year, while United lost $13.6 billion over the same period.