US airlines say they've reached a turning point in recovery

DALLAS (AP) — U.S. airlines say they have hit a turning point: After a lousy first quarter, they expect to be profitable as Americans return to travel in the biggest numbers since the start of the pandemic.

American Airlines is the latest carrier to give a rosy outlook for the rest of 2022. American said Thursday that although it lost $1.64 billion in the first quarter, sales hit a record in March, and the company expects to earn a profit in the second quarter.

“Demand is as strong as we have ever seen it,” American CEO Robert Isom told analysts.

Shares of American and other airlines rose in morning trading.

American’s upbeat view echoed similar comments from Delta Air Lines and United Airlines, which both predicted in recent days that they will earn full-year profits despite big losses in the first quarter.

Air travel was subdued in January and February by the omicron variant that caused an increase in COVID-19 cases among both travelers and airline employees. But travelers came back in March, and airline executives believe that Americans are eager to travel this summer and won't be discouraged by another, smaller uptick in coronavirus cases and higher airfares.

The recovery is being powered by leisure travelers, but the airlines say they are seeing more business travelers.

American said overall business travel is 80% of pre-pandemic levels, dragged down by corporate travel, which is only 50% of 2019 levels. Isom said, however, that corporate bookings are the highest they have been since the start of the pandemic, “and we expect that to continue as more companies reopen their offices.”

Along with higher revenue, however, airlines face higher costs for fuel and labor. American’s fuel bill more than doubled from a year earlier, and payroll costs rose more than 15%.

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