American Airlines just had their best quarterly revenue since the beginning of the pandemic. However, the airline still suffered a loss of $931 million in the fourth quarter of 2021. It’s been a tough few years for airline travel.
In 2021, there were equal amounts of intensity surrounding the fight against COVID-19 and the fight for businesses to recover from 2020 lockdowns. American Airlines reported a loss of $2 billion in total for 2021, which sounds devastating. However, it’s a significant improvement from the losses the company faced in 2020. The airline reported losses of nearly $9 billion in 2020.
They noted that the omicron variant most definitely played a role in 2021’s performance. The effect was particularly noticeable in December as more and more crew called in sick. The company canceled several flights during one of the busiest times of the year as a result. As travelers attempted to scatter to see their loved ones for the holidays, many faced those last-minute cancellations.
Omicron Continues to Take a Toll On American Airlines
American Airlines CEO Doug Parker told CNBC that, “These results would have been better were it not for omicron. We saw a large increase in cancellations… Our net bookings through the quarter fell from what had been about 80% of 2019 levels to less than 50% at the end of 2020 in the last week.”
Losses in the billions have become the new normal for airlines over the last two years. One of the only reasons the industry has survived is due to government assistance, and many have been forced to go into debt. American lost $2 billion in 2021 but also received $4.2 billion in payroll support from a government program. Compared to 2020, demands for leisure travel increased significantly. Some business travelers also returned, but with a surge in popularity for remote work, business travel rates may never return to what they were pre-pandemic.
$9.4 billion of reported revenue in the final quarter of 2021 is more than double what Americans brought in during the same quarter in 2020. However, it’s still down 17% from fourth-quarter revenue in 2019.
It Will Take Time Before Numbers Return to Normal
“Over the past year, we have experienced periods of high travel demand countered by periods of decreased demand due to new COVID-19 variants,” Parker said in a statement. “This volatility has created the most challenging planning environment in the history of commercial aviation.”
American still isn’t running at the capacity that they were in 2019. Total capacity was down by about 13% compared to figures from 2019’s fourth quarter. It’s expected that capacity will still be down 8% to 10% in the upcoming quarter compared to pre-pandemic numbers. Despite this, the airline still hired 16,000 new employees in 2021. They plan to hire an additional 18,000 in 2022.
Experts say most of the industry’s recovery is dependent on the return of corporate and international travel.