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Final lines of government help swing both American Airlines and Southwest Airlines to a profit

American got $1.4 billion in payroll grants from the federal government and Southwest got $724 million in the second quarter.

Both Fort Worth-based American Airlines and Dallas-based Southwest Airlines would have been deep in the red in the second quarter despite a surge in flying in the spring and early summer.

Instead, thanks to $15 billion that went to the aviation industry in the latest government-support package passed in March, they reported a profit.

American Airlines reported a slim $19 million profit for the second quarter, the first time it has seen any profit since the end of 2019, before the COVID-19 pandemic forced carriers to turn to survival mode. That was only possible with the help of $1.4 billion in payroll support that the company received through the most recent government stimulus act.

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Without the help, American said losses would have totaled about $1.1 billion.

“While the top line continues to improve, American Airlines will still be losing money on a net income basis in the next quarter,” Third Bridge Group analyst Peter McNally said. “In fact, street expectations don’t see the company generating positive earnings per share until the second quarter of 2022, trailing their peers by a wide margin.”

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American’s $7.5 billion in revenue was a vast improvement compared with a year ago but is still below the $12 billion in sales in 2019.

Southwest Airlines turned a $348 million profit in the second quarter thanks to its $724 million in government payroll support. Again, without help, the company would have lost $206 million.

It was the second consecutive quarter with a profit for Southwest, which made $116 million in the first quarter, thanks to the government payroll support.

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“Second-quarter 2021 marked an important milestone in the pandemic recovery as leisure travel demand surged,” said a statement from Southwest CEO Gary Kelly. “We generated net income in June 2021, representing our first monthly profit without taking into account the benefit of temporary salaries and wages cost relief provided by PSP proceeds, since the negative effects of the pandemic began in March 2020.”

Southwest’s revenue was $4 billion for the three months between April and June, but that was still 32% below the same period in 2019.

Airline leaders said they expect the government payroll support to be over after getting more than $62 billion in combined industry assistance going back to March 2020. But even with the help, the four largest airlines alone lost $35 billion in 2020.

In recent months traffic has bounced back across the industry, driven by leisure flyers who abandoned air travel for much of 2020. Paying passenger traffic was up six-fold at American Airlines compared with the same period a year ago. Revenue hit $7.5 billion, an 87% increase from the first quarter of this year.

American, which has been hoarding cash since March 2020 and now has a bank account with $21.3 billion, says it plans to pay down $15 billion in debt by 2025.