American Airlines Posts Biggest Quarterly Loss Since 2008
Carrier to ‘Err on the Side of Being Smaller’
American Airlines planes in Miami
American Airlines announced financial results for first quarter of 2020.
First quarter revenue dropped nearly 20% to $8.52 billion from $10.58 billion in the same period last year as the demand for travel began to significantly fall in the last month in the quarter as a result of the coronavirus outbreak. The company recorded a loss of $2.2 billion, compared to net income of $185 million in Q1 2019.
The world’s largest airline will “err on the side of being smaller” heading into the coming months, said CEO Doug Parker on an earnings call. “We all expect the recovery will be slow and the demand for air travel will be depressed for some time.”
The airline said that nearly 39,000 employees are taking early retirement, voluntary leave, or reduced pay in the coming months as it looks to temporarily shrink itself amidst the low demand for travel.
At the start of the second quarter, the airline expects to burn through approximately $70 million in cash a day, which it forecast will fall to about $50 million a day in June. American will end the first quarter with $6.8 billion of available liquidity and said it expects to end Q2 with approximately $11 billion of liquidity.
It will alsocut flying by 70% in June, the biggest decline in flying yet for the company heading.
The airline took $744 million in special fleet impairment charges as due to the early retirement of aircraft older aircraft such as Boeing 757s and 767s ahead of schedule. It also reported a one-time expense of $218 million for a new contract with aircraft and fleet maintenance workers.
(Photo: Accura Media Group)
