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| Photo: Markus Mainka | Shutterstock |
US airlines have reported a collective loss of $1.6 billion in the first quarter (Q1) of 2024, which is much higher than the $1.2 billion loss reported in the first quarter of last year. The US Bureau of Transportation Statistics (BTS) report released this week confirmed this increase. However, airlines are hopeful that the upcoming summer travel demand will help handle this loss.
Revenue and Expenditure: A Complex Balance
In Q1 2024, US airlines recorded operating revenue of $56.0 billion, with ticket sales contributing $41.8 billion, which is 74.6% of total revenue. However, operating expenses jumped to $56.3 billion, which was more than the revenue. Key Expenses:
- Labor Costs: $20.0 billion (35.8% of total expenses)
- Fuel Costs: $11.3 billion (20.0% of total expenses)
The increase in labor costs means that retaining employees and making new hires has become more expensive. At the same time, fuel costs have seen a slight decrease.
Domestic vs. International Operations
The situation of domestic and international operations also remained different:
- Domestic Operations: Loss of $0.9 billion (lower than $1.3 billion in Q1 2023)
- International Operations: Loss of $0.8 billion ($800 million more than Q1 2023)
The domestic sector has seen an improvement in losses, while the international operations have seen an increase in losses.
Weather and industry challenges
Several major weather events in the US in the winter of 2024, such as snow and storms, caused disruptions in flight operations. In addition, troubles at major aircraft manufacturers such as Boeing, such as the grounding of the Boeing 737 Max 9 and delays in aircraft deliveries, also further complicated the situation.
Hopes tied to summer
Losses in the first quarter of the year are nothing new, as travel demand is low during this period. But the increase in this loss compared to last year is worrisome. Airlines are now eyeing the summer travel period, which is already in full swing. Last year, airlines made good profits in the summer:
- Q2 2023: $3.7 billion profit
- Q3 2023: $0.4 billion profit
This year too, airlines hope that the growing number of passengers, the holiday season and high travel demand will balance the Q1 losses.
Conclusion
US airlines have faced financial challenges in the first quarter of 2024. However, as the summer season is starting, airlines are hopeful that this season will lead them to financial recovery. Increasing passenger demand and summer vacations can compensate for this loss. Will this summer bring financial success to the airlines? Only the coming months will tell!
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