Mixed Earnings Reports for Three Big North Texas Businesses

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Fort Worth-based American Airlines posted losses, Dallas-based Southwest Airlines turned a profit thanks to federal aid and Dallas-based AT&T reported revenue increases in the first quarter of 2021.

American Airlines Posts $1.25 Billion Loss, Delays New Jets

American Airlines said Thursday that it lost $1.25 billion in the first quarter and continued to slash costs, including delaying delivery of new jets as it waits for air travel to recover from the pandemic.

Chairman and CEO Doug Parker said the airline continues to see signs that demand for tickets is improving.

American said it burned through $27 million in cash each day in the quarter, down from $30 million a day in the fourth quarter of 2020. The airline said it reduced 2021 costs by more than $1.3 billion, including a new round of voluntary buyouts that will result in 1,600 employees leaving the company.

Leisure travel within the U.S. has picked up recently, with about 1.4 million travelers going through airports each day this month. Still, that remains about 40% below the pre-pandemic pace of 2019.

With less traffic, American reached a deal with Boeing to delay delivery of 23 737 Max jets until 2023 and 2024 and convert five of those to a larger version of the plane. American expects to take 14 Max jets over the next 12 months.

The first-quarter loss was roughly in line with Wall Street expectations. Excluding federal payroll aid and other temporary items, American said it lost $4.32 per share. The average estimate of 17 analysts surveyed by FactSet was a loss of $4.30 per share.

A year ago, when the pandemic was just starting to hit the U.S., American lost $2.24 billion.

Revenue was $4.01 billion, just shy of the $4.04 billion forecast by analysts and down 53% from $8.52 billion a year ago.

Shares of Fort Worth-based American Airlines Group Inc. rose 2% in trading before the opening bell.

US Airline Bailout Helps Southwest Post $116 Million Profit

Southwest Airlines is the first major U.S. airline to report a profit since the pandemic started, as federal payroll aid helped boost the company to net income of $116 million in the first quarter.

Without the federal money, Southwest would have lost $1 billion in the quarter.

Southwest also echoed rivals in saying that demand for travel is continuing to improve. The airline said Thursday that bookings for leisure trips within the United States have been improving each week since mid-February.

"While the pandemic is not over, we believe the worst is behind us, in terms of the severity of the negative impact on travel demand," Chairman and CEO Gary Kelly said in a statement.

Southwest is benefitting more from the pickup in leisure travel because its biggest rivals -- American, Delta and United -- depend more on business travel and long-haul international flying, both of which remain deeply depressed.

Kelly also expressed gratitude for federal payroll aid -- the airline industry has received $64 billion in cash and low-interest loans over the past 13 months to help cover labor costs.

Without Southwest's share of that aid and other temporary items, Southwest would have lost $1.72 per share. That result was still slightly better than Wall Street feared. The average estimate of 13 analysts surveyed by Zacks Investment Research was for a loss of $1.82 per share.

Southwest posted revenue of $2.05 billion, slightly above the analysts' prediction of $2.03 billion.

Shares of Dallas-based Southwest rose 2% in trading before Thursday's opening bell. At Wednesday's closing price, the shares had more than doubled in the past 12 months and gained 33% since the beginning of 2021, beating the 11% increase in the S&P 500 index.

AT&T Credits Smart Phone Sales for Q1 Profit

Shares of AT&T Inc. rose Thursday after the telecom giant's first-quarter results topped analyst expectations.

The company's wireless division, its largest unit, added 595,000 phone customers who pay a monthly bill, up from 163,000 in the same period in 2020. It also added 207,000 prepaid phone customers.

In the WarnerMedia entertainment unit, revenue rose 9.8% to $8.5 billion. The company doesn't break out how many people sign up for its streaming service, HBO Max, but said there are now 44.2 million subscribers to HBO Max or the traditional HBO channel in the U.S. Entertainment companies have launched several new streaming services in the past couple years in an effort to gain on Netflix and as the audience for traditional TV shrinks.

AT&T also signed up 46,000 home internet customers and lost 620,000 video customers. AT&T is spinning off its DirecTV business after having lost about 60% of its satellite and cable TV customer base since buying DirecTV in 2015.

The Dallas company reported first-quarter net income of $7.55 billion, or $1.04 per share. Adjusted for one-time items, they came to 86 cents per share, beating the average estimate of 77 cents per share from 16 analysts surveyed by Zacks Investment Research.

Revenue rose 2.7% to $43.94 billion, topping Wall Street's estimate of $42.76 billion.

AT&T shares rose more than 5% to $31.74 in morning trading. The shares had increased nearly 5% since the beginning of the year as of Wednesday's close, while the S&P's 500 index has increased 11%.

Elements of this story were generated by Automated Insights using data from Zacks Investment Research.

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