After two straight years of losses, Fort Worth-based American Airlines reported year-end and quarter-end profits due to higher airfare.

At an investor meeting, the company reported $803 million in the fourth quarter of 2022, roughly double the amount the company earned in 2019. American ended the year with a profit of $127 million.

US executives are hoping to ride the wave of high demand for travel by planning to hire more pilots, add more planes to their fleet and invest in technology to avoid southwest-like bad weather. But the Americans face challenges, such as reducing the multibillion-dollar debt it received largely by modernizing its fleet and getting enough pilots and planes into the air.

The American turns the corner after two years of losses. The company has suffered during the pandemic, losing $10.9 billion in 2020 and 2021.

How to avoid a winter disaster

American’s competitor in North Texas, Dallas-based Southwest, posted a $200 million loss in the fourth quarter due to a winter storm that canceled more than 17,000 flights and a US Department of Transportation federal investigation.

US CEO Robert Isom credits investment in technology to track crew, aircraft and maintenance requirements to help the company avoid a similar fate.

COO David Seymour added that they are working with IT professionals to improve technology that allows them to cope with severe weather.

“These events … are changing very dynamically and very quickly, and we must keep up with them,” Seymour said. “But recovery is more important. We started looking ahead at what the potential hurricane could be and started building our pre-hurricane recovery plan, and that’s where we’re very focused.”

Problems ahead

CFO Devon May said the Americans plan to hire 2,000 pilots this year. The company is aiming to Ratify Labor Contracts but does not expect this to happen in the first quarter of the year, May added. Airlines are currently in talks with pilot and flight attendant unions, both of which are picketing due to manpower and scheduling shortages.

The amount of money an American can earn per available seat-mile is expected to be at least 24% higher than last year, May said. Seat-miles is an industry term for estimating the capacity of an aircraft. The available seat mile is equal to the number of seats on board the aircraft multiplied by the flight distance of the aircraft.

But the cost of transporting passengers is expected to be higher as Americans plan to ratify labor contracts, May said.

The American also invests in aircraft. The company received 10 aircraft and recovered five from long-term storage, Kerr said. This year, they expect delivery of two A321neos, the activation of nine 738s from long-term storage, and the delivery of 17 Boeing 737 MAX-8s, Kerr said.

AeroAnalysis International analyst Dyorin-Perkash Bechai says the company’s biggest challenge is not so much competing with other airlines like Southwest Airlines, but getting enough planes and pilots into the air to meet demand.

“American Airlines has exploded the market for regional airline pilots by offering significantly higher wages at their regional airlines,” Bechai wrote in an email. “But it appears that although they have increased wages, it has not had the desired effect as there is still a large shortage to operate the desired regional network.”

Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at [email protected] and follow him on Twitter: @sbodine120.