American, United expect profit in March; warn of increased costs

• American said ticket sales are recovering fast after the drop in early December

• United expects profit in the second, third and fourth quarters of this year

American Airlines (NYSE: AAL) and United Airlines (NYSE: UAL) said on Thursday passenger traffic is likely to recover in March after a plunge due to Omicron coronavirus variant.

The U.S. airlines also warned about the increased costs this year.

American said ticket sales are recovering fast after the drop in early December, but are still low as compared to pre-Omicron levels. United also said it sees recovery in bookings and cancellations.

"As a result, we remain optimistic that Omicron's impact, while significant, will be focused on January and February at this point," United's Chief Commercial Officer Andrew Nocella told investors on an earnings call.

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Nocella added that impact of any other possible future variant on its revenue is expected to be muted in comparison to Delta variant.

United expects profit in the second, third and fourth quarters of this year on account of increased demand. Similarly, American expects to report profit in March.

American said domestic leisure and short-haul international traffic are close to 2019 levels. It said domestic business travel recovered to about 70% of the pre-pandemic level. Demand for long-haul international travel is still quite low.

Increased costs

Costs of United are expected to be higher than in 2019, and American said its costs would be 5% higher in 2022 compared to pre-pandemic levels.

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United posted an adjusted loss of $1.60 per share in the quarter, compared to $7.00 per share in the previous year.

American posted an adjusted loss of $1.42 per share in the quarter, compared to $3.86 per share in the same period last year.

Picture Credits: Reuters