American Airlines, Alaska Airlines report strong earnings as travel momentum continues

Yahoo Finance Live anchors discuss quarterly earnings for American Airlines and Alaska Airlines.

Video Transcript

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JULIE HYMAN: A busy travel season giving a long-awaited boost to airlines in the third quarter. American and Alaska each reported better-than-estimated results today, in the quarter that covers the late summer travel season.

Let's talk about American Airlines first here, as the, by far, larger airline. Saw record quarterly profit rise 13% over the same period in 2019, as it had oper-- as it operated less capacity. And capacity is interesting here because what I've been noticing as well in these earnings reports, is that the airlines have been keeping this so-called "capacity discipline," right?

The impulse, historically, has been, demand's going up, we're gonna fly more planes, we're gonna fly more routes. And then when things fall off again, their profit gets depressed. And they're kind of holding the line this time, Brad.

BRAD SMITH: Yeah, there's a few things that play there, too. It's the number of pilots that they need in order to even add on new routes. It's the refreshing of some of their fleets, as well, that they're doing right now. And we continue to talk about some of the large plane orders that each of the airlines are making, too, that are going to be infused into their fleets over the next five to seven years, in many cases the deliveries will begin.

And so in the interim period of time, the capacity restoration story that all of them are talking about-- whether it's Delta, whether it's American Airlines-- it's all a question in the near-term for consumers of, when will that actually start to bring it back down prices? And what are the expenses going to be in the near-term as well for the airline operators, especially on fuel? Fuel skyrocketed for American Airlines year-over-year, and that is something that they have to get a handle on as well. [INAUDIBLE]

BRIAN SOZZI: And right on. And the Alaska quarter, a little snoozy to me. Not a very long earnings release. But I think one big takeaway from these airline earnings, Brad, is what American highlighted at the top of their report. Ended the third quarter with $14.3 billion of total available liquidity. More than double the amount at the end of 2019.

And that is not the first airline to call out how much liquidity they have coming out the other side of the pandemic. There's gonna be another crisis. When it happens, who knows. But I think a lot of these airlines are better positioned from a capitalization standpoint to deal with a crisis than they were relative going into the COVID-19 pandemic.

BRAD SMITH: It's a question of returning to sustainable profitability here, too. They've talked about the American Airlines team delivering on goals of running a reliable operation and returning to profitability. For this same quarter, when we think about this time last year, Delta was really the first airline to be able to get back to profitability on a quarterly basis.

And so now that other airlines are finally catching up, after what was a very busy summer travel season, was a headache for many of the customers and passengers that were out there, how many of the airlines-- as well going into and in the midst of this quarter, where we're looking at holiday travel-- have been able to answer enough of those questions to retain a positive net promoter score or sentiment among the flying public, and essentially ensure that they're able to retain that profitability over a longer period of time, too?

BRIAN SOZZI: Yeah, let me-- I'll go back to Alaska. They're calling out-- they were named for the second year in a row to "Newsweek's" list of America's best customer service. I've never flown Alaska but little nugget there. Clearly very proud of.

BRAD SMITH: It was a record for them.

BRIAN SOZZI: Yeah.

BRAD SMITH: A record quarter for them record.

JULIE HYMAN: Stock is down, though.

BRAD SMITH: Yeah.

BRIAN SOZZI: It's down.

BRAD SMITH: It is.

BRIAN SOZZI: But they got good customer service.

BRAD SMITH: Well 99% completion rate, too. That'll help you out.

JULIE HYMAN: They're the one. They're the only ones--

BRIAN SOZZI: They're the only ones, yeah.

JULIE HYMAN: --that have good customer service in the airline industry.

BRIAN SOZZI: Interesting.

JULIE HYMAN: I'm not bitter--

BRIAN SOZZI: Interesting.

JULIE HYMAN: --about my flying experiences.

BRIAN SOZZI: All right.