American Airlines expects higher profitability in 2019 on cost cuts and expansion of its ""premium economy" program that introduces greater price differentiation to ticketing, boosting profits. American Airlines executives warned of significant travel delays if the US government shutdown goes on much longer, but said Thursday that customer demand has not been significantly affected thus far.
The comments came as American reported better-than-expected fourth-quarter profits and offered a bullish profit outlook on 2019.
Chief Executive Doug Parker applauded air traffic controllers and security screeners with the Transportation Security Administration who have worked without pay for more than a month, minimizing the impact on the flying public as a partial US government shutdown drags on.
But Parker worker absences to increase, and urged policymakers to find a quick resolution.
"We're putting a strain on people who've been working while missing a couple of paychecks and that will at some point result in people not being at work," Parker said on a conference call with reporters and analysts.
"When we don't have enough TSA officers, you'll see longer lines, when we don't have enough (air traffic) controllers you'll see more delays in airspace."
Some US airports have faced rising absenteeism, forcing them to scale back the number of security lines available to screen passengers.
"We would encourage our government to get to a position where these hard working people can be paid for what they're doing," Parker added.
Air transport workers have cautioned that the prolonged shutdown is endangering travel, warning in a joint statement from three unions on Wednesday that "we cannot even calculate the level of risk currently at play, nor predict the point at which the entire system will break."
Speaking at an event at one of Washington's main airports on Thursday, air traffic controllers warned that the pressure is starting to tell as workers report for a full 10-hour shifts, and then have to drive for ride-sharing firms Uber and Lyft before and after work to bring in money for their families.
American executives expressed confidence in the safety of the system, saying increased delays were their biggest fear from a prolonged shutdown.
"We're always going to make the right decision for the safety and security of our team members and our customers, so there's no lack of confidence in what we have in front of us," said President Robert Isom.
Strong profits
Executives said there has been a modest drop-off for travel expected in the next 14 days due to the shutdown, but demand remains strong overall following robust ticket sales in 2018.
In the fourth quarter, American's profits came in at $319 million, compared with a loss of $583 million in the same period of last year that were due to one-time accounting costs tied to US tax reform.
Revenues in the latest quarter climbed 3.1 percent to $10.9 billion.
The company expects 2019 profit of $5.50 to $7.50 a share, well above the $5.87 expected by analysts.
The airline's profit is getting a boost this year from $300 million in cost savings and expansion of its "premium economy" program that introduces greater price differentiation to ticketing, boosting profits.
Shares of American rose 5.9 percent to $33.52 in mid-morning trading.
Explore further: American Airlines earnings dip on higher costs
