American Airlines Posts First Quarter Net Loss of $2.2 Billion on Operating Revenues of $8.5 Billion

On Thursday, American Airlines announced a first quarter net operating loss of $2.2 billion or ($5.26) per share on $8.5 billion in revenues. The carrier ended the quarter with $6.8 billion in available liquidity which will be bolstered to $11 billion in the second quarter.


American Airlines Boeing 777-300 - Courtesy American Airlines

Today, American Airlines (NASDAQ: AAL) announced a first quarter net loss of $2.2 billion or ($5.26) per share on $8.5 billion in operating revenues. The company ended the quarter with $6.8 billion in liquidity and expects the level to be increased to around $11 billion by the end of the second quarter. American expects to reduce operating expenses and CAPEX by around $12 billion in 2020 due to lower fuel costs, capacity reductions and other austerity measures. The carrier has reduced system capacity by around 80 percent for April and May and 70 percent for June. Additionally, American Airlines will accelerate the retirement of four aircraft types including 20 Embraer E190s, 34 Boeing 757s, 17 Boeing 767s and nine Airbus A330-300s. The company has also suspended nonessential hiring, paused non-contractual pay raises, reduced board compensation and implemented voluntary leave and early retirement programs. Nearly 39,000 company team members have taken early retirement, a reduced work schedule or partially paid leave. In Thursday’s announcement, American Airlines’ Chairman and CEO Doug Parker said,


“Never before has our airline, or our industry, faced such a significant challenge. True to fashion, the American Airlines team has done a phenomenal job taking care of our customers and each other during such difficult and often heartbreaking times. We are incredibly proud of their selflessness and dedication to others. We have moved quickly and aggressively to reduce our costs and bolster our liquidity. We are particularly grateful for the $5.8 billion in financial assistance American will receive through the payroll Support Program, and we appreciate the bipartisan congressional and U.S. Department of the Treasury and Department of Transportation support to protect airline jobs and ensure a strong and competitive U.S. airline industry. We have a lot of difficult work ahead of us. And while there is still uncertainty in what’s to come, we are confident that through the dedication of the American Airlines team and our swift actions, we will get through this for our team, our customers and our shareholders.”


American Airlines raised around $2 billion during the first quarter and ended the quarter with $6.8 billion in liquidity. Additionally, they achieved the right to access up to $10.6 billion under the U.S. CARES Act. The airline also has unencumbered of assets valued at over $10 billion (excluding the value of the AAdvantage program) which may be pledged as collateral for future borrowing needs, including a secured $4.75 billion loan under the CARES Act. Share repurchases and dividend payments have been suspended until further notice and the carrier doesn’t have any large non-aircraft related debt maturities over the next 24 months, other than a recently arranged $1 billion 364-day delayed draw term loan facility.


The carrier is projecting a daily cash burn rate of around $70 million per day for the second quarter, which is expected to decline to $50 million/day in June, as cost saving initiatives gain traction. In trading Thursday morning, shares in American Airlines Group, Inc. (NASDAQ: AAL) were 1.5 percent lower at $12.44/share (10:02 AM EDT).


Source: American Airlines

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