Major airlines including American Airlines (NASDAQ: AAL), Southwest Airlines (NYSE: LUV), and JetBlue Airways (NASDAQ: JBLU) trended lower in morning trading on Thursday after announcing their calendar Q4 results.
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While AAL’s Q4 results were buoyed by strong travel demand and high fares, LUV’s results were a disappointment due to operational disruptions. In contrast, JBLU reported its highest yearly revenues in history. Let us look at these results in more detail.
LUV Craters to a Loss in Q4
Southwest Airlines Q4 earnings were a big disappointment as the airliner reported a net loss of $220 million versus a profit of $68 million in the same period in 2021. This loss was a result of the airliner’s more than 16,700 flight cancellations in Q4, which resulted in the company incurring a pre-tax negative impact of around $800 million.
The adjusted loss came in at $0.38 per share which was wider than analysts’ expectations of a loss of $0.08.
LUV posted operating revenues of $23.8 billion, a 6.2% increase over FY19 and surpassing analysts’ estimates by $30 million.
Bob Jordan, President, and CEO commented, “Based on current revenue and cost trends, we currently expect a first quarter 2023 net loss. However, we are encouraged by current booking trends in March 2023. Our 2023 plan continues to support solid profits with year-over-year margin expansion for full year 2023.”
Looking forward, in Q1, LUV expects operating revenues to grow in the range of 20% to 24% with available seat miles (ASMs) or capacity projected to increase by 10% year-over-year.
For FY23, LUV raised its ASMs forecast in the range of 16% to 17% from a prior projection of 15%.
AAL Tops Earnings Estimates in Q4
Strong demand for air travel resulted in AAL reporting better-than-expected Q4 results. Adjusted earnings came in at $1.17 per diluted share, surpassing the consensus expectations of $0.96.
AAL posted record Q4 revenues of $13.2 billion, up 16.6% over the same period in 2019 and in line with the estimates. This is despite AAL flying at 6.1% less capacity.
More encouragingly, AAL is well on track to pay down $15 billion of total debt by the end of 2025.
While in the first quarter, AAL expects to break even, in FY23, adjusted earnings are anticipated to come in between $2.50 and $3.50 per share, well above the consensus estimate of $1.89.
JBLU Not Feeling the Blues in Q4
JBLU posted Q4 revenues of $2.4 billion, a jump of 31.7% year-over-year and its “highest fourth quarter operating revenue in company history.” This surpassed analysts’ estimates by $10 million.
Adjusted earnings came in at $0.22 per share versus consensus forecasts of $0.20.
A key highlight of FY22 was that the airline returned to profitability in the second half of the year “with revenue growth at record levels, combined with an acute focus on maintaining an optimal low-cost structure.”
Joanna Geraghty, JetBlue’s President and COO of JBLU commented, “As we kick off 2023, we’re pleased to see the demand environment remain solid into the seasonally trough period of the year.”
In the first quarter of FY23, JBLU expects revenues to grow in the range of 28% to 32% year-over-year while in FY23, it is projected to increase in the high single digits to low double digits.
The company expects to post an adjusted loss between $0.45 and $0.35 per share in Q1 while in FY23, adjusted earnings are likely to range from $0.7 to $1 per share.
The U.S. Global Jets ETF (JETS) has slid by 2.1% in the past year.
