American Airlines recorded a $2.06 billion net loss in the
second quarter as the Covid-19 virus led to an extraordinary 90% decline in
Despite the loss, the carrier expressed confidence that it
can weather the pandemic. American ended the second quarter with $10.2 billion
in liquidity and expects to end Q3 with approximately $13 billion, CFO Derek
Kerr said during an earnings call Thursday.
The third quarter figure accounts for the $4.75 billion
federal Cares Act loan that American expects to close on this quarter along
with a $1.2 billion Goldman Sachs secured note. The figure also accounts for
continued cash burn during the third quarter.
American saw cash burn of $30 million per day in June, far
below its full second quarter average of $55 million due to a rise in demand and
By comparison, Delta reported daily cash burn of $27 million
in June, and United reported $25 million.
Going forward, American expects demand to be the primary
variable in cash burn, since most cost-cutting has already been done.
Like other U.S. airlines, American said that demand dipped
in July due to a spike in Covid-19 cases. Net bookings, said chief revenue
office Vasu Raja, are currently down 75% to 80% year-over-year compared to a
June peak of being down 50%. During that period, the carrier particularly
benefitted from a relative surge in demand for travel across the Sunbelt, which
it served by building up capacity at its Dallas/Fort Worth and Charlotte hubs.
CEO Doug Parker said American’s goal is to reach a point of
being cash positive sometime next year.
Last week, American notified 25,000 employees of potential
furloughs when federal payroll grants expire on Sept. 30. The carrier has already
eliminated 5,100 positions in management and support staff.
Though he didn’t downplay the challenging times, Parker said
that the crisis is enabling American to make changes to its fleet, network and
managerial staffing that needed to be done after its merger with U.S. Airways
in 2013. In that sense, he said, the crisis should give American an advantage
relative to competitors once the industry recovers.
“I am looking forward to that day when we are through all of
this and have that advantage,” Parker said.