Both American Airlines and Southwest Airlines would have been deep in the red in the second quarter despite a surge in flying in the spring and early summer.
Instead, each reported a profit and are boosting plans to call back employees out on leave and even hire new ones to keep up with demand throughout the rest of the year thanks to $15 billion that went to the aviation industry in the latest government support package passed in March.
American Airlines reported a slim $19 million profit for the second quarter, the first time it has seen any profit since the end of 2019 and before the COVID-19 pandemic forced carriers to turn to survival mode. That was only possible with the help of $1.4 billion in payroll support that the company received through the most recent government stimulus act.
Without the help, American said losses would have totaled about $1.1 billion.
Southwest Airlines turned a $348 million profit in the second quarter thanks to its $724 million in government payroll support. Again without help, the company would have lost $206 million.
It was the second consecutive quarter with a profit for Southwest, which made $116 million in the first quarter, again thanks to government payroll support.
“Second quarter 2021 marked an important milestone in the pandemic recovery as leisure travel demand surged,” said a statement from Southwest CEO Gary Kelly. “We generated net income in June 2021, representing our first monthly profit without taking into account the benefit of temporary salaries and wages cost relief provided by PSP proceeds, since the negative effects of the pandemic began in March 2020.”
Airline leaders said they expect the government payroll support to be over after getting more than $62 billion in combined industry assistance going back to March 2020. But even with the help, the four largest airlines alone lost $35 billion in 2020.
But in recent months traffic has bounced back across the industry driven by leisure flyers who abandoned air travel for much of 2020. Paying passenger traffic was up six-fold at American Airlines compared to the same period a year ago. Revenue hit $7.5 billion, an 87% increase from the second quarter of 2020, one of the worst financial quarters in aviation history.
American, which has been hoarding cash since March 2020 and now has a bank account with $21.3 billion, now says it plans to pay down $15 billion in debt by 2025.
American has hired 3,500 new employees this year after shedding nearly 10,000 workers in 2020. It also announced plans Wednesday to further boost pilot hiring.
Southwest Airlines said Thursday it also plans to recall the rest of its employees from leave problems that it begged them to take during the pandemic.
“To support the return of flight activity, we expect to recall the vast majority of our Employees early from voluntary time-off by the end of third quarter 2021, which is expected to reduce our prior forecasted savings from voluntary leave programs beyond second quarter 2021,” Southwest said in its earnings release.
