The fourth quarter of 2023 (Q4) yielded strong results for America's "Big Five" airlines. These are the U.S.' five largest airlines: Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines. Many factors are behind these strong financial results, and airlines face multiple headwinds going into 2024.

Significant Growth

United Airlines witnessed a 16% surge in profits year-over-year (YOY) in First Class ticket sales. Similarly, its Basic Economy ticket sales brought the airline a 20% profit increase.

Meanwhile, Delta Air Lines closed out 2023 by doubling its quarterly profit. The airline reported $2.04 billion in net income for the last three months of 2023. This was a significant increase from $828 million in the same period in 2023. Overall revenue rose 6% to $14.22 million compared to last year.

Like United, Delta saw a significant increase in premium cabin demand as revenue from its First Class and Premium Economy-branded products was up 15% during the fourth quarter of 2023. This increase beat the 10% revenue growth the airline received from its standard Economy Class tickets.

American Airlines released its Q4 2023 financial report on January 25 before market open. America’s largest airline reported a record full-year revenue of approximately $53 billion. According to its report, American and its regional partners operated nearly two million flights in 2023 with an average load factor of 83.5%. Q4 2023 was the best such period in the airline’s history with generated revenue of $13 billion. 

Southwest released its Q4 2023 financial report on the same day as American. Much like the other airlines, Southwest posted record numbers in Q4 2023 with operating revenues of $6.8 billion, representing a 10.5% increase YOY. Southwest’s full-year operating revenues in 2023 were a record $26.1 billion, a 9.6% increase YOY. Healthy leisure demand and continued yield strength especially contributed to these numbers especially during holiday travel periods.

There are various reasons for all this growth experienced by the airlines. It all boils down to an overall increase in demand throughout 2023, especially during the usually busy Thanksgiving travel season. International ticket sales also played a massive role in this growth. More people have been traveling internationally in 2023, especially at the tail end of the year. Increases in regular and premium ticket sales further contribute to the success of airlines like Delta, United, and American.

2024 Outlook

The airlines have clarified that 2024 will not start on the same high note that the previous year ended. Delta already saw its stock tumble 9% last week compared to the end of 2023. Delta forecasts an increase in revenue of around 3-6% in the first quarter of 2024 compared to the same period last year.

Delta CEO Ed Bastian also notes that corporate travel demand is improving, something not widely seen since coming out of the pandemic. More business travel will increase bookings for Delta and other U.S. airlines. This type of travel can also increase premium cabin sales further.

However, there are still problems, particularly in the supply chain. Delta's CEO says that many aerospace companies that supply parts for planes have lost a lot of experience in the pandemic. Getting more employees and overall experience back has been challenging. As such, Delta has noticed that it has been taking longer to put aircraft back into service after they go in for routine checks or maintenance.

United is the only one operating the Boeing 737 MAX 9 out of these four airlines. This aircraft type has been grounded by various carriers worldwide, including the three North American carriers operating it: Aeromexico, Alaska, and United. These airlines have had to reschedule and cancel multiple flights following the sudden MAX 9 grounding. United has clarified that it expects a loss in Q1 2024 thanks to the groundings. Despite this, United also expects an overall increase in 2024 profits.