American Airlines warns that its steep losses continued to start 2021 - The Dallas Morning News

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American Airlines warned investors Tuesday that it stands to lose more than $1.2 billion for the first quarter when it reports earnings next week and that a recent uptick in ticket sales didn’t prevent it from losing upwards of $27 million a day for the first three months of 2021.

Fort Worth-based American Airlines was the second major carrier, following United, to warn that the COVID-19 pandemic is still battering financial results, a sign that it could take much longer to repair the financial pain from the last year.

The newest estimate means that American’s net losses will total more than $10 billion during the COVID-19 pandemic period, even after taking more than $10 billion in government grants to help cover payroll.

Airlines are struggling to bring their financial losses to a close more than a year after the COVID-19 pandemic began and analysts aren’t expecting carriers to see a profit until at least the third quarter of this year. Meanwhile, airlines are rejiggering schedules with more leisure routes for summer to warm weather and outdoor destinations in hopes of filling planes that have been mostly empty since March 2020.

It’s often been a “two-steps forward, one-step” back recovery for airlines, that have seen their best passenger numbers of the pandemic over the last six weeks with spring break, but those cheaper tickets are being sold mostly to leisure customers that tend to fly mostly during school holidays.

American reported some financial progress after a year of steep losses. The carrier said its “core cash burn” was approximately $4 million a day in March, which includes $8 million a day in debt interest charges. Without that debt, the company would have actually been making a daily profit in March.

First-quarter sales will be down about 62% compared to the first quarter of 2019, American said. United said Monday that its first-quarter sales will be down about 66% compared to the same period.

American will bring back the last of its furloughed flight attendants in early May and carriers are putting more flights in the air this summer with hopes that vaccine distribution will result in more travel.

While recent positive signs have brought hope to airlines, the industry is still far from emerging from the financial mess that pandemic has brought.

Passenger volumes were still down 41% last week compared to pre-pandemic levels, according to trade group Airlines 4 America. Corporate business sales were still off by 81% last week compared to 2019, according to Airline Reporting Corp., which tracks ticket sales.

American Airlines reported that it will finish the first quarter with about $17.4 billion, enough cash to carry it for nearly two years even if first-quarter results don’t improve. However, it also racked up about $9 million a day in interest on that debt, which analysts have warned will weigh on profits for years to come.

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American Airlines warns that its steep losses continued to start 2021 - The Dallas Morning News
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