US airlines are enjoying a bumper year of revenue as travelers flock to make up for lost time during the COVID-19 pandemic.
Airline CEOs see demand for travel remaining strong, despite rising living costs that are weighing on household budgets.
American Airlines on July 20 raised its 2023 earnings forecast after its second-quarter profit topped Wall Street estimates. Texas-based American Airlines is the latest airline to offer an upbeat outlook.
United Airlines and Delta Air Lines also revised their earnings estimates upward as consumers cut back on spending on goods in favor of experiences.
The average number of passengers moving through airport checkpoints hit a four-year high in June, according to data from the US Transportation Security Administration.
International booking demand has also been particularly strong after pandemic-related restrictions were lifted.
Figures from travel website Kayak show that searches for summer trips to Europe by US customers have increased by 55% compared to last year.
US airlines say travel is becoming a top priority for consumers, but limited capacity is preventing the companies from quickly catching up with demand to sustain the post-pandemic travel boom.
However, with the US Federal Reserve (Fed) trying to keep inflation in check, airlines continue to face questions about travel spending, causing their stocks to not recover to pre-pandemic levels despite a recovery in revenue.
Strong demand has boosted airfares, allowing carriers to offset rising costs, but inflation data shows airfares have peaked.
According to American Airlines' earnings report, the airline's total revenue per available seat mile in the third quarter is forecast to decrease by 4.5-6.5% compared to the same period last year./.
Source
Comment (0)