This is a repost of an article from Reuters »
United States airlines expect strong travel demand that drove record fourth-quarter revenues to continue into 2023, but economic uncertainty and burgeoning labor and operations costs could cloud their rosy outlooks.
American Airlines (AAL.O), JetBlue Airways Corp (JBLU.O) and Alaska Air Group (ALK.N) forecast better-than-expected full-year earnings. Airlines are cashing in as consumers snap up tickets following a pandemic-induced slump, making the industry a rare bright spot as markets grasp with runaway inflation, rising interest rates and economic uncertainty.
American Airlines Chief Executive Robert Isom said post-holiday bookings surged, underpinned by domestic and short-haul international flights. “We expect a strong demand environment to continue in 2023 and anticipate further improvement in demand for long-haul international travel this year,” he told analysts.
But while limited capacity due to a scarcity of aircraft has allowed airlines to raise fares to offset rising costs, higher pilot pay and other pressures could sap carriers’ profits. “In addition to the higher labor costs, we’re working hard to offset cost pressures from higher rents and landing fees tied to operating and growing in high-cost terminals across our high-value geography as well as elevated maintenance activity, given the age of our fleet,” JetBlue CFO Ursula Hurley told analysts.
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