United, Southwest and American announce 2019 financial results

The trio of United States-based carriers announced their Q4 2019 and Full Year results, joining Delta Air Lines, which announced its yearly results on January 14, 2020. All in all, the four biggest carriers in North America and some of the biggest airlines in the world had a healthy year: with the exception of Delta, despite being negatively affected by the 737 MAX groundings, all airlines demonstrated healthy profitability.

Southwest Airlines (LUV) , an exclusively Boeing 737 operator, was the only airline that saw its net income drop compared to 2018, despite an increase in operating revenues. All in all, Southwest‘s net income in 2019 amounted to $2.3 billion, a 6.7% drop compared to the previous year when the airline earned $2.4 billion. The low-cost carrier was possibly the most affected airline by the 737 MAX crisis, as it was forced to reduce capacity by 1.6% year-on-year (YoY) despite initial plans to grow its Available Seat Miles (ASM) number by 5% in 2019.

Chief Executive Officer and Chairman of the Board Gary Kelly highlighted that the airline’s performance throughout the year was “truly remarkable” considering that the airline suffered an estimate of $828 million reduction in income and significantly less capacity due to the groundings.

“We currently have 34 MAX aircraft in our fleet, and at the beginning of last year, we expected to have 75 at the end of 2019, and another 38 deliveries in 2020,” Kelly added.

The airline agreed to a confidential deal with Boeing regarding the groundings. The compensation from the manufacturer will be in the form of a reduction in the cost of current and any future 737 MAX planes that Boeing delivers. As a result, Southwest expects reduced depreciation costs in the coming years.

Star shining in Fort Worth

Despite the fact that American Airlines (A1G) (AAL) also has a significant amount of 737 MAX aircraft grounded, including the fact that in Q4 2019 alone it was forced to cancel over 10,000 flights due to the lack of additional capacity, the company managed to increase its net income by 19.4% compared to 2018: it earned $1.6 billion versus $1.4 billion. Impressively, American Airlines’ (A1G) (AAL) Revenue Passenger Miles (RPM), indicating demand, rose by 3.6%, despite ASM only rising by 0.1%.

The company also reached a compensatory deal with Boeing regarding the revenue losses affiliated with the Boeing 737 MAX groundings that allowed the airline to add $30 million to its employee profit-sharing scheme.

Positive winds in the Windy City

The Chicago-based United Airlines demonstrated the most impressive growth in net income, as it posted a final profit line of $3 billion, an increase of 41.8% compared to the result in 2018 that amounted to $2.1 billion. 2019 was a record year for United, as the carrier transferred a record number of passengers, finishing off the year with 162 million travelers boarding its aircraft. Significantly, it also reduced its Cost per available seat mile (CASM) by 1.2% from $13.83 to $13.67.

Interestingly, while the carrier currently has 14 Boeing 737 MAX aircraft grounded with 171 more on order, the press release announcing United Airlines’ financial results do not mention the aforementioned grounded jet once.

Delta‘s best year

While Delta Air Lines was the first out of the Big Four carriers to announce its financial results, it had the greenest bottom line: the Atlanta-based carrier earned a net income of $4.7 billion in 2019, with operating revenue of $47 billion.

Ed Bastian, Chief Executive Officer of Delta Air Lines, noted that the year was in the history of the airline “operationally, financially and for our customers.”

“Our people, and their commitment to bringing best-in-class travel experiences to our 200 million customers, are the foundation for our success,” he added.

Crucially, the airline also concluded important investment deals, including a 20% stake purchase in LATAM and an equity investment in Hanjin-KAL, the biggest shareholder of Korean Air.


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