A member of a ground crew walks past American Airlines planes parked at the gate during the coronavirus disease (COVID-19) outbreak at Ronald Reagan National Airport in Washington, April 5, 2020.
Joshua Roberts | Reuters
American Airlines lost more than $2.2 billion in the first three months of the year — its biggest quarterly loss since 2008 —as the coronavirus pandemic drove down demand for air travel.
American’s revenue dropped nearly 20% from a year earlier to $8.52 billion, slightly below analyst estimates. Shares were up 0.4% in premarket trading.
American, like other airlines is facing a sharp decline in passengers because of coronavirus. U.S. airline travel volumes dropped about 95% in recent weeks from a year earlier as travelers stay home.
The air travel slump is a sharp turnaround for the industry that boasted its 10th straight year of profits in 2019 and had prepared for another uptick in travel demand this year.
“Never before has our airline, or our industry, faced such a significant challenge,” American’s CEO Doug Parker said in an earnings release.
The company has raced to cut costs, slashing flights and freezing hiring. In the second-quarter it expects to burn through roughly $70 million a day, which it forecast to fall to about $50 million a day in June. Close to 39,000 employees have volunteered for unpaid or partially-paid leave, Parker said in a staff memo. American had more than 133,000 staff members as of the end of last year.
American is also taking steps to shore up liquidity, which it expects to increase to $11 billion at the end June, up from $6.8 billion at the end of the first quarter. It also expects to have up to $10.6 billion in federal payroll grants and loans under the $2.2-trillion coronavirus relief package Congress approved last month. The payroll grants prohibit recipients from involuntarily furloughing or cutting the pay rates of any workers through Sept. 30. Work schedules have been reduced, meaning smaller paychecks for many workers, because of reduced flying.
American lost $2.65 per share on an adjusted basis in the three months ended March 31.. The airline took $744 million in fleet impairment charges as it retires aircraft like its Boeing 757s and 767s ahead of schedule as travel demand drops. It also reported a one-time expense of $218 million for a new contract with aircraft and fleet maintenance workers.
American Airlines executives will hold an 8:30 a.m. call to detail results and its outlook.