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Earning Calls: American, Southwest, JetBlue Report Q4 2019 Numbers

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Earning Calls: American, Southwest, JetBlue Report Q4 2019 Numbers

Earning Calls: American, Southwest, JetBlue Report Q4 2019 Numbers
January 23
14:03 2020

MIAMI — On a momentous day for the airline industry, three major U.S. carriers – American Airlines, Southwest Airlines, and JetBlue – reported its fourth-quarter earnings for 2019.

While the airlines saw revenue growth from last year, the Boeing 737 MAX grounding has placed a damper on profits for some.

American Airlines (AA) fared the best among the U.S. carriers, boasting revenues of $11.3 billion in the past quarter, marking a 3% increase year-over-year that matched analysts’ expectations. The airline also announced that 2020 earnings are expected to range between $4 and $6 per share.

Even as American posted profits of $414 million (a 27% increase from last year), concerns still remain regarding the impact of the Boeing 737 MAX grounding.

The airline operated 24 737 MAX aircraft prior to the model’s grounding in March last year and was forced to cancel over 10,000 flights in the fourth quarter alone due to its diminished fleet size.

Nevertheless, the world’s largest airline by fleet size performed better than its domestic competitor, Southwest.

Having the largest fleet of 737 MAXs in the United States with 34 aircraft, the budget carrier has been hit hardest by the MAX grounding. The aircraft type has been removed from Southwest’s schedule through June 6th as hopes for a swift return to service fade.

Quarterly revenues increased by a measly 0.4% to $5.7 billion as profits declined 21% to $514 million, falling short of Wall Street’s estimates. Costs also rose 7.7% last year as a result of the MAX grounding.

“With the ongoing uncertainty regarding the timing of the MAX return to commercial service, we remained nimble and adjusted our 2019 plans, as necessary, without abandoning our long-term goals,” said Southwest CEO Gary Kelly.

Aside from the unpredictability of the predicament, the airline still reported its 47th consecutive year of profitability, a testament to its endurance and a glimmer of optimism under the current circumstances.

Southwest also came to an agreement with Boeing at the end of 2019 for $124 million in compensation for obstacles created in the wake of the 737 MAX grounding.

While Kelly has expressed his satisfaction with the deal, he highlighted that Southwest will continue to discuss further reparations with the manufacturer.

The smallest of the airlines that reported this week was JetBlue, which posted revenues of $2 billion in the fourth quarter.

Copyright – JetBlue

While quarterly profits fell 4.9% year-over-year to $160 million, the company’s shares have appreciated 5.7% since the year began, outperforming the S&P 500 (+2.8%).

Given the airlines rising performance, some have even questioned the possibility of Southwest purchasing JetBlue in order to diversify away from its 737 MAX exposure, but no public discussion has taken place alluding to such a maneuver.

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About Author

Andre Madrid

Andre Madrid

A sophomore Finance student at the University of Miami, and an aviation enthusiast since my early youth. When I'm not staring up at the sky, I enjoy watching war documentaries and reading about current events.

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