American, Southwest profits rise even as 737 MAX impact swells

[BENGALURU] American Airlines Group and Southwest Airlines posted quarterly profit rises on Thursday even as the two US carriers pointed to rising impact from the continued grounding of Boeing 737 MAX.

Both companies said they remained in negotiations with Boeing Co over compensation for the 737 MAX grounding, now in its eighth month following two deadly crashes in Indonesia and Ethiopia that together killed 346 people.

"We're working to ensure that Boeing shareholders bear the cost of Boeing's failures, not American Airlines' shareholders," American Chief Executive Doug Parker said on a conference call.

American shares rose 2 per cent to US$28.85 and Southwest shares were up 4.7 per cent at US$55.72.

Both airlines have been forced to cancel more than 100 daily flights into early next year as Boeing works on software and training updates to win regulatory approval for the planes to fly again.

American trimmed the top end of its adjusted 2019 forecast at US$5.50 per share versus its previous forecast range of US$4.50 to US$6 per share and raised the estimated costs related to the MAX grounding to US$540 million for the year.

Southwest did not provide a full-year profit forecast but said it took a US$210-million hit to operating income in the quarter from the ongoing MAX safety ban.

But with slimmer fleets and fewer seats to sell, both airlines have been able to charge higher fares thanks to robust US travel demand.

Closely-watched revenues per available seat mile, or unit revenues, rose 4.2 per cent in the quarter at Southwest, which primarily flies domestically, while total unit revenues at American, with a larger international presence, rose 2 per cent.

American's net income rose to US$425 million, or 96 cents per share, in the third quarter ended Sept 30 from US$372 million, or 81 cents per share, a year earlier, while total operating revenue rose 3 per cent to US$11.91 billion.

At Southwest, net income rose to US$659 million, or US$1.23 per share from US$615 million, or US$1.08 per share, a year earlier on a 1.1 per cent rise in operating revenue to US$5.64 billion.

REUTERS