Southwest, American Airlines announce earnings reports that were better than expected
DALLAS - The two big airlines based in North Texas both reported fourth quarter earnings, and both were better than analysts had expected.
Still, both Southwest and American are dealing with ongoing contract negotiations with some of their unions and that's having a big impact on their bottom lines. If that’s left unresolved, it could affect the traveling public.
Fort Worth-based American Airlines made a profit of $192 million in the fourth quarter.
That's about triple the profit analysts expected.
During an earnings call Thursday, CEO Bob Isom said the airline reported a full year profit of $1.9 billion.
"Demand remains strong, and we've seen robust bookings to start the year as travel trends begin to normalize," Isom said.
But the company said current passenger demand and fuel costs may lower profits this year.
Then there's the issue of contracts.
American was able to finalize a four-year deal with its pilots in August, but American’s flight attendants have voted to strike and are asking the feds again to be released from mediation.
"We continue to negotiate with the APFA with the shared goal of reaching of deal that will pay our flight attendants at the top of the industry," Isom said.
American Airlines flight attendants seek permission to go on strike
American Airlines flight attendants moved one step closer to walking off the job as they look to put pressure on the airline through the holidays.
Dallas-based Southwest Airlines is in a similar position with its unions.
CEO Bob Jordan said Thursday that costs were higher due to recently ratified labor contracts with its pilots.
The airline’s flight attendants have also voted to strike due to being unhappy with ongoing negotiations.
Still, the company reported a full year profit of $498 million and had a record number of passengers.
"We're also working to restore our network, address our staffing needs, and return our aircraft to full utilization, and of course we're in the middle of negotiations with a majority of our labor unions," Jordan said.
Southwest Airlines pilots okay five-year contract, includes immediate 29% pay raise
The agreement includes a 29.15 percent pay raise for Southwest Airlines pilots on the day of ratification.
Travel expert Gabe Saglie said it’s in the airlines' best interest to iron out contracts with all of its unions sooner than later.
"So the numbers aren't phenomenal," Saglie said. "There's a tension now being placed on these negotiations. And I think the sort of the general public out there is becoming much more aware of where these negotiations stand and how they're affecting the airlines that were flying day in and day out."
Still, Saglie said the financial future for both carriers appears to be bright, with consumer spending trends beginning to normalize.
In his words, "travel for 2024 continues to be driven by robust appetite."