US aid lifts Southwest to Q1 profit, American loses $1.25B

With a strong push from taxpayers, Southwest Airlines is the first major U.S. airline to report a profit since the pandemic started, and airlines executives say that the industry is on course to recover from a financial crisis caused by the pandemic.

Southwest Chairman and CEO Gary Kelly said Thursday that his airline has seen steady improvement in U.S. leisure-travel sales since mid-February. He credited rising vaccinations and falling new cases of COVID-19.

“We believe the worst is now finally behind us," Kelly said.

Southwest reported net income of $116 million in the first quarter, although it would have lost $1 billion without federal aid to help cover labor costs.

American Airlines posted another large loss, $1.25 billion, but its CEO also sounded upbeat heading into the peak summer-travel season, when airlines usually earn most of their money. The airline is aggressively expanding its schedule for summer and recalling employees from leave.

“We are starting to see light at the end of this very dark tunnel,” Doug Parker said on American's call with analysts.

About 1.4 million people are passing through U.S. airport checkpoints each day this month, double the number of air travelers in January. Still, the April figure remains about 40% below the pace of April 2019. Lucrative business travel and long-haul international flying remain much more deeply depressed, down around 80% from 2019.

Previous travel bursts have fizzled after COVID-19 infections surged, but the rollout of vaccines has airline leaders cautiously optimistic this time.

Airlines have been offering rock-bottom fares to attract passengers, and vacationers are responding: Leisure travel in the United States is already nearly back to pre-pandemic levels.

However, leisure customers typically pay...