After five quarters of red ink as air travel was battered by the COVID-19 pandemic, Alaska Air Group reported a quarterly profit Thursday — but the turnabout comes with an asterisk, because without federal payroll support the Seattle-based airline company would still have lost money.
For the three months ended June 30, Alaska said it earned $397 million, or $3.15 per share, compared to a net loss of $214 million, or $1.74 per share in the second quarter of 2020.
Without federal aid under the CARES Act Payroll Support Program, as well as some accounting adjustments, the company would have posted a loss of $38 million, or $0.30 per share.
Still, even that loss is just a fraction of the adjusted net loss of $439 million Alaska suffered a year ago in the same quarter, when the pandemic and lockdowns ravaged the airline industry.
“As we put the worst of last year’s downturn behind us, Alaska is back on the path to profitability,” said CEO Ben Minicucci in a statement. “We are executing our plan, rebuilding our network, leveraging our capacity to meet growing demand, and delivering exceptional service and value to our guests.”
Other airlines reported greatly improved financial results Thursday as well. American Airlines and Southwest Airlines both posted second-quarter profits thanks to federal pandemic relief, The Associated Press reported.
Alaska’s passenger revenue for the quarter rose to $1.35 billion, a fourfold improvement from the same period a year ago. Cargo revenue, the one segment that did not collapse entirely during the lockdown, was $57 million, a 46% improvement from a year earlier.
Minicucci, on a conference call with analysts, attributed the revenue recovery to “a dramatic return in leisure demand that began to gain momentum in March,” according to a transcript. He said the passenger volume went “from down 34% in April to down 18% in July. We are consistently flying about 110,000 passengers per day, and forward bookings are approximately 85% of 2019 normalized levels.”
The sharp rebound in demand and the resulting financial performance “give us confidence that the worst of the downturn is behind us,” he said, while cautioning that “the impact of the Delta variant may pose some risk in the recovery projections.”
The reports on Thursday underscored the progress that airlines are making in rebuilding after the coronavirus crushed air travel — and how much farther they must go to fully recover.
At Seattle-Tacoma International Airport, Alaska’s key hub, daily passenger volume in mid-July was triple the year-ago levels, though still down 27% compared to pre-pandemic 2019 volume.
Southwest said it made money in June even without the federal aid. CEO Gary Kelly said the recent quarter “marked an important milestone in the pandemic recovery as leisure travel demand surged.”
Both carriers reported revenue far above 2020 levels. That reflects the rising number of people taking flights in the U.S. — now about 2 million a day, or about 80% of pre-pandemic levels. Domestic leisure travel is roughly back to normal, but business and international travelers are still mostly absent.
American Airlines eked out a second-quarter profit of $19 million, including nearly $1.5 billion in federal relief. Without the taxpayer funding and other special items, American would have lost $1.1 billion, or $1.69 per share. Still, that is American’s smallest adjusted loss in any quarter since 2019, and the adjusted loss was less than the $2.03 per share loss forecast by analysts, according to a FactSet survey.
Fort Worth, Texas-based American’s revenue jumped more than fourfold from a year ago, but was down 37% from the same quarter in 2019.
Southwest reported a profit of $348 million, reversing last year’s loss of $915 million in the same three-month stretch. Excluding federal relief and other special items, the Dallas-based airline would have lost 35 cents per share — more than analysts’ prediction of 21 cents per share in losses.
Revenue quadrupled from a year ago to $4.01 billion but remained 32% lower than the same quarter in 2019.
Material from The Associated Press is included in this report.