US airlines forecast big profits in 2023 on booming travel demand

Las airlines The US released strong earnings forecasts for the year on Thursday despite concerns about the economy, after the buoyant demand for air travel during the crucial holiday season helped boost quarterly results.

Big airlines are trying to cash in on the post-pandemic travel boom, making the industry one of the few bright spots amid soaring inflation, rising interest rates and a looming recession.

The sector has also been able to raise the pricesas consumers continue to spend on leisure despite signs of a slowdown, while production problems for aircraft manufacturers help keep capacity under control. The reopening of China is also expected to add to the optimism.

“The industry of airlines will benefit from the reopening of travel, but we expect more outbound travel from China to the West than from the West to China, as Chinese consumers take their “retaliation trips,” Helane Becker, an analyst at Cowen, said in a note. .

On Thursday, American Airlines, JetBlue Airways Corp and Alaska Air Group all forecast better-than-expected earnings for the year.

“As we enter 2023, we are pleased to see the demand environment remain strong in the seasonally slower period of the year,” said Joanna Geraghty, JetBlue’s president and chief operating officer.

American Airlines, the company’s partner in the Northeast Alliance, forecasts adjusted earnings of between $2.50 and $3.50 per share for 2023, well beating analyst expectations of $1.77, according to Refinitiv data.

Resilient demand has allowed Fort Worth, Texas-based American to focus on cleaning up its balance sheet. Its goal is to write down $1 billion of total debt by the end of 2025.

Earlier this month, rival airlines United Airlines and Delta Air Lines filed higher-than-expected quarterly earnings and offered a bullish outlook amid recession fears.