It is no secret that airlines are working round the clock to cope with challenges. Moreover, the rising coronavirus cases in Europe and other parts of the world, have the potential to inflict additional damage to the airline industry. For example, American Airlines posted another big quarterly loss. It is not surprising as the coronavirus pandemic had a negative impact on summer travel demand. Hopefully, the carrier was able to reduce its cash burn. Let’s have a look at the results to analyze the situation.
It is worth mentioning that, revenue fell 73% in the third quarter that ended on September 30 to $3.17 billion from $11.9 billion a year earlier. The major airline suffered a $2.4 billion net loss in the third quarter from a $425 million profit in 2019.
Importantly, excluding one-time items, American Airlines posted a per-share loss of $5.54 and this result surpassed expectations.
Based on the information provided by the company, it authorized a stock sale to raise up to $1 billion.
Unfortunately, the carrier began furloughing 19,000 employees in October. The terms of $25 billion federal aid for the struggling airline sector expired, and companies have the right to reduce the number of employees. It is hard to blame American as well as other airlines, as the coronavirus pandemic created huge pressure. Moreover, it will be very difficult to solve their problems without such harsh measures.
American Airlines and main challenges
Interestingly, American Airlines, as well as other carriers, urged lawmakers and the Trump administration to provide another $25 billion in aid for airlines. However, the future of this deal remains unknown. Moreover, it is hard to determine when lawmakers and the administration will reach an agreement.
It is worth noting that, despite all challenges, revenue surpassed expectations and reached $3.17 billion. Analysts expected that revenue would reach $2.81 billion.
Moreover, the carrier trimmed its cash burn to about $44 million a day in the third quarter, from $58 million in the previous quarter. Moreover, American Airlines expects to reduce this number to $25 to $30 million in the fourth quarter.
The company made the decision to differ deliveries of 18 Boeing 737 Max planes.
American, Delta, United Airlines, and others suffered huge losses due to the coronavirus pandemic. Moreover, it could take several years to recover from this crisis.