American Airlines, Southwest Swing to Loss Amid Rise in Covid-19 Cases -- 2nd Update
July 23 2020 - 8:33AM
Dow Jones News
By Dave Sebastian
American Airlines Group Inc. and Southwest Airlines Co. posted
losses for the second quarter after improvements in passenger
traffic stalled in July as some states in the U.S. saw a resurgence
in Covid-19 cases.
"We expect air travel demand to remain depressed until a vaccine
or therapeutics are available to combat the infection and spread of
Covid-19," Chairman and Chief Executive Gary Kelly said
Thursday.
The companies pointed to a rise in demand in May and June from
the troughs of March and April. Southwest said bookings softened
and trip cancellations increased in July.
American said it expects third-quarter system capacity to fall
about 60% from the year-ago period, and Southwest said it is
re-evaluating its August and September capacity plans.
American posted a net loss of $2.07 billion, compared with a
profit of $662 million in the comparable quarter last year.
Southwest, the largest U.S. domestic carrier, recorded net loss of
$915 million, compared with a profit of $741 million a year
earlier.
American's revenue plunged 86.4% to $1.62 billion, while
Southwest's revenue fell 82.9% to $1 billion for the quarter ended
June 30.
American said it burned about $55 million a day for the second
quarter, down from nearly $100 million in April.
Southwest has burned about $18 million a day on average in July,
according to its estimates. It has trimmed its average core cash
burn to $23 million a day for the second quarter from about $30
million a day in April, primarily due to improving revenue.
Airlines are trying to stockpile cash to weather a crisis that
they have said will likely last years. The $25 billion allocated to
U.S. airlines under the $2.2 trillion stimulus package passed in
March is set to expire at the end of September.
With the aid, carriers have agreed not to lay off or furlough
workers until Oct. 1. But some, including American and United
Airlines Holdings Inc., have already outlined plans that could
result in thousands of workers being furloughed.
American said more than 41,000 employees have opted for an early
retirement, a reduced work schedule or a partially paid leave,
while more than a quarter of Southwest's workforce have volunteered
for extended time off and separation programs.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
July 23, 2020 08:18 ET (12:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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