Advertisement
This is member-exclusive content
icon/ui/info filled

businessAirlines

American Airlines ‘generated cash’ in May — a first since the pandemic began

Business travel is still suffering and debt loads are higher, but American is in better financial shape than it has been in 15 months.

American Airlines says it generated a cash profit for the first time in 15 months on the strength of leisure travelers returning to flying in May, especially over the Memorial Day holiday.

Fort Worth-based American’s pandemic milestone is marked with plenty of caveats, and total revenue is still expected to be down 40% for the second quarter compared with the second quarter of 2019, but the carrier is indicating that it’s making progress toward being financially sustainable.

“Given the strength of summer bookings outlined above and based on preliminary internal results, for the first time since the pandemic began, the company generated cash for the month of May and expects to end the second quarter with more than $20 billion of total liquidity versus its previous guidance of $19.5 billion,” American wrote in an investor report filed Thursday.

Advertisement
Aviation News

Stay prepared. Receive the latest airlines news, delivered straight to your inbox.

Or with:

American’s strong Memorial Day holiday was most evident at DFW International Airport. DFW hosted about 88% as many passengers during the 2021 Memorial Day weekend as it did in 2019, DFW Airport CEO Sean Donohue said. On the busiest day of the weekend, more than 200,000 passengers traveled through DFW, he said.

American Airlines has posted $11.6 billion in losses since the beginning of 2020 when COVID-19 upended the airline industry and left carriers largely without passengers to support their massive operations. It drove Dallas-based Southwest to its first net loss in 49 years and pushed some foreign airlines into bankruptcy.

Advertisement

However, American’s operating profit doesn’t include increasing burdens such as debt repayments. That debt has now reached about $50 billion, although the company does have $20 billion in cash to help get it through any losses going forward.

“Over the long run, we’re going to need international traffic, we’re going to need business demand back,” American Airlines president Robert Isom said at the Alliance Bernstein investor conference Thursday. “Clearly, we’ve been encouraged by what we’ve seen, and the trend lines have been moving in the right direction, although slowly.”

American Airlines was in the worst financial position of any airline entering the pandemic, with more debt and a larger workforce than other carriers.

Advertisement

If current trends continue, demand for leisure travel could approach or exceed the record-breaking 2019 summer travel season, American said.

But American noted that most of the passengers flying are taking leisure trips and that business traffic is slow to return.

“Although business demand continues to be weak, the company is starting to see increased demand among small- and medium-sized enterprises and certain large corporate customers,” American said.

American has spent the last 15 months trying to retool itself by cutting staff from its administrative ranks and retiring aging airplanes.

American chief financial officer Derek Kerr said the company may be able to hit 2019 levels of flying with a smaller fleet. “We have the capability of flying the same capacity that we flew in 2019 with 10% less airplanes,” Kerr said.

Southwest Airlines CEO Gary Kelly has said that he thinks the airline may be able to generate a monthly profit in June.

Delta Air Lines CEO Ed Bastian said Thursday during an investor presentation that he hopes the airline can be profitable “in the back half of the year.”

Advertisement