Wednesday, June 14, 2023
Airlines based in the US collectively started 2023 with a major loss of net profit, according to US Department of Transportation (DOT).
With each carrier’s financial reports filed quarterly with the Buero of Transportation Statistics, a more than $1 billion after-tax net loss was reported during the first quarter.
The results are, however, an improvement from Q1 2022, where airlines recorded a more significant deficit. In addition, a pre-tax operating loss was reported last year, whereas an operating gain was experienced during the same period this year.
A loss and a gain
According to the DOT, 26 scheduled US passenger airlines contributed to the financial results for Q1 2023. Jointly, the airlines reported an after-tax net loss of $1.2 billion and a pre-tax operating gain of $32 million.
The result is nearly $4 billion better than last year’s first quarter, when the after-tax net loss amounted to $5.1 billion.
Airlines also improved their operating results significantly this year. With a gain of more than $30 million in Q1 2023, a pre-tax operating loss of $5.2 billion was reported last year.
Comparing last year’s results
Despite the improvements, Q1 2023’s after-tax net income results showcase somewhat of a setback compared to the previous quarter. In Q4 2022, the airlines had a gain of $2.1 billion.
Although not confirmed, the winter storms in December that wreaked havoc across the industry are likely to have contributed to the loss in the first quarter of 2023.
During the other two quarters of 2022, airlines experienced after-tax net income gains, with $2.2 billion in Q2 and $2.4 billion in Q3, according to the DOT.
The earnings represent the bounce back in demand during the summer of 2022 after many pandemic restrictions eased.
Pre-tax operating profits in Q4 2022 were the opposite of net income results. A $3.7 billion gain was reported, effectively contributing to the momentum seen during Q1 2022.
Operational revenue outcomes
According to the DOT, total operating revenue for the first quarter 2023 was $52.9 billion. Share of total 1Q 2023 operating revenue includes:
The total for fares amounted to $39.5 billion, or 74.6%, compared to 68.9% in 1Q 2022
Baggage fees totaled $1.7 billion, representing 3.3%, compared to 3.7% in 1Q 2022
Reservation change fees resulted in $256 million, or 0.5%, compared to 0.6% in 1Q 2022
The department noted that fees are included for net income, operating revenue, and operating profit or loss calculations.
Interestingly, the airlines also recorded $52.9 billion worth of operating expenses during Q1 2023. The share of the total operating expenses during the quarter includes fuel and labor.
Fuel cost $12 billion, accounting for 22.6%. It was more than the same period last year when the cost was 19.5% of operating expenses. Labor resulted in $17.7 billion, or 33.4%, compared to 34.2% in Q1 2022.
In domestic operations, operating revenue reached $40.4 billion, and operating expenses amounted to $40.8 billion.
International operating income was $12.5 billion, with operating expenses totaling $12.1 billion.
Thursday, November 23, 2023
Wednesday, November 22, 2023
Tuesday, November 21, 2023
