MRT: Abbott Sends DPS to UT for Protection; Abbott Endorses Gonzales; AA Loses $312M in Q1; SWA Cuts IAH Flights; Ogg to Address Hidalgo Staff Cases
Here's What You Need to Know in Texas Today.
MustReadTexas.com – @MustReadTexas
BY: @MattMackowiak
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THURSDAY – 04/25/24
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TOP NEWS
“American Airlines reports $312 million loss for first quarter,” Dallas Morning News' Alexandra Skores -- “American Airlines reported a $312 million first-quarter loss for 2024 on Thursday.
The Fort Worth-based airline, which had to adjust for costs associated with new labor contracts, took $86 million in charges for one-time events including expenses from new labor deals. American’s operating expenses went up to almost 7%, including an 18% rise in salaries and other expenses.
The first quarter, however, didn’t include the up-front costs of American’s new pilot agreement, which the company included in the fourth quarter of 2023. The agreement raised pilot pay by more than 40% over four years.
American reported first-quarter revenue of $12.6 billion, an increase of 3.2% from a year earlier. Of that figure, $11.5 billion was passenger revenue, $187 million in cargo revenue and $925 million was for other revenues, like American’s AAdvantage card program and airport lounges.
“While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets,” said Robert Isom, CEO of American in a release. Our team is running a fantastic operation, driving revenue through our commercial initiatives, efficiently managing costs, and producing free cash flow to further strengthen our balance sheet.”
Analysts at Raymond James said that while American missed first-quarter expectations, the second-quarter guide is looking strong. But not as strong as competitors, researchers said.
Melius Research reported similarly that the airline anticipates the next quarter to be stronger.
“American’s path to closing the margin gap to Delta & United is largely a function of revenue as they continue to execute on the cost side (relatively) given a strong operation and consistency in capacity planning,” the report said. “Again, American falls into many of the buckets investors like, so if they are able to take advantage of other airlines that are struggling, it would elevate the story further.”
American, like other major airlines, is feeling the pressure of plane manufacturer Boeing Co.’s issues in delivering new aircraft orders. The delay in deliveries follows a series of safety issues plaguing the airplane manufacturer, such as January’s Boeing 737 Max 9 blowout that left a gaping hole in the side of an Alaska Airlines fuselage. The incident continues to make headlines, and the Federal Aviation Administration opened a formal investigation into Boeing.
Boeing delivery delays have impacted mainline capacity production, however, the airline reported that those delays have been offset by being more efficient with regional planes.
“Aircraft delivery delays are impacting the entire industry, but they are not having the same impact on American as other carriers, since we are not as dependent on new aircraft deliveries as most of our peers,” said Devon May, chief financial officer at American.
Isom said he’s talked to “everyone at Boeing” that he could could with the same message: “Get your act together.”
“I can’t tell you if they’re making progress or not, because it’s all actions that matter, not words, and we’re continuing to work with them,” Isom said. “We’ll do everything we can to support Boeing. We need them to be successful in the long run.”" DMN
“Southwest Airlines cuts Houston's George Bush Airport flights,” Dallas Morning News' Alexandra Skores -- “Southwest Airlines is cutting operations at four airports, including Houston’s George Bush Intercontinental Airport, after losing $231 million in the first quarter.
On Thursday, the Dallas-based airline reported lower expectations for revenue to be down as much 3.5% and capacity growth is estimated to grow 4%, previously 6%. It’s also anticipating aircraft seats available and trip frequency to tighten in the second half of the year.
On Aug. 4, the airline will cease operations at Bellingham International Airport, Cozumel International Airport in Mexico, Houston’s George Bush Intercontinental Airport and Syracuse Hancock International Airport. It’s also implementing capacity reductions in both Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport. Jordan said these markets weren’t “performing,” which ultimately was the deciding factor.
“While it is disappointing to incur a first quarter loss, we exited the quarter with healthy profits and margins in the month of March,” said Bob Jordan, CEO of Southwest in a release. “We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations. I want to thank our more than 74,000 employees...as we adapt to aircraft delivery constraints and adjust to slower than planned growth for this year and next.”
All employees who were impacted by the four airports cut will be offered jobs elsewhere if they choose to stay with Southwest.
The airline is implementing “cost control initiatives,” which include limiting hiring and offering voluntary time off. It expects to end the year with 2,000 less employees compared to the end of 2023.
Analysts at Raymond James reported Southwest “appears to be making the right changes.”
“Surprisingly, the 2024 cost outlook is largely consistent with expectations despite MAX delivery shortfall,” the report read. “However, the revenue performance was somewhat disappointing.”
Southwest has also lowered its expectations for aircraft deliveries from plane maker Boeing Co., where it now it expects 20 Boeing 737 Max 8 aircraft deliveries in 2024, when it previously anticipated 46. In March, a regulatory filing reported the airline lowered its expectations to 46, from previously 79.
“Achieving our financial goals is an immediate imperative,” Jordan said. “The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025.”
The delay in deliveries follows a series of safety issues plaguing the airplane manufacturer, such as January’s Boeing 737 Max 9 blowout that left a gaping hole in the side of an Alaska Airlines fuselage. The incident continues to make headlines, and the Federal Aviation Administration opened a formal investigation into Boeing.
Boeing and Southwest entered a supplemental agreement relating to its order for Max 7 and Max 8 aircraft. It’s subject to change based on ongoing discussions with the plane manufacturer.
Boeing has been under fire by U.S. airlines to “become a better company,” as Jordan said last month during the JPMorgan Industrials Conference. Airlines like Fort Worth-based American Airlines have also called out the plane maker.
Jordan said he visited Boeing in late March and is “encouraged by the comprehensive approach” leadership is taking, despite there being a lot of work to do. Southwest plans to revisit Boeing this summer and is also visiting Spirit Aerosystems.
Southwest also ratified an agreement with its flight attendants this week, the first major airline to do so. The airline has ratified 11 labor deals since Oct. 2022." DMN
HOU CHRON: “Texas Southern regents pick James Crawford III as president” Houston Chronicle
HOU CHRON: “DA Ogg expected to address Hidalgo staffers' criminal case” Houston Chronicle
THE HILL: “Texas Gov Abbott faces backlash after mass arrests at UT Austin pro-Palestinian protest” Texas Tribune
TX TRIB: “Gov. Greg Abbott endorses U.S. Rep. Tony Gonzales in runoff” Texas Tribune
DMN: “Who is Jeff Yass, the Tik Tok billionaire pumping millions into the Texas voucher fight?” DMN
EXTRA POINTS
Last night's Texas sports scores:
> MLB: Cubs 7, Astros 2 Bleed Cubbies Blue
> MLB: Rangers 5, Mariners 1 AP
> NHL: #8 Golden Knights 3, #1 Stars 1 (2-0 Vegas) AP
Tonight's Texas sports schedule:
> 1:20pm: MLB: Astros at Cubs
> 1:35pm: MLB: Mariners at Rangers
> 7pm: NFL: 2024 NFL Draft (ABC / ESPN)
DALLAS STARS: Cowlishaw: “Could Stars' clock strike too soon? Dallas may need playoff miracles" DMN
DALLAS COWBOYS: “What we're hearing about Dallas Cowboys' 2024 NFA draft plans" DMN
TEXAS RANGERS: “Civil lawsuit dismissed against former Texas Tech basketball player Pop Isaacs" AP
HOUSTON ASTROS: “Framber Valdez to return from IL on Sunday" Hou Chron
SAN ANTONIO SPURS: “Spurs have options when it comes to their future NBA draft picks" SAEN
TEXAS BASEBALL: Bohls: “Despite the flaws and struggles, Texas baseball has impressed with its resillience" AAS