American Airlines reported a staggering loss of $2.24 billion for the first quarter, when the coronavirus pandemic triggered a sharp drop in air travel.
The airline’s revenue fell 19% while costs continued to rise even as the virus spread.
The situation facing the airline industry has grown more dire since the first quarter ended. Air travel within the U.S. has plunged 95% from a year ago, judging by the number of people screened at the nation’s airports.
“Never before has our airline, or our industry, faced such a significant challenge,” Chairman and CEO Doug Parker said.
American’s massive loss compared with a profit of $185 million in the same quarter last year. American said that adjusted for non-recurring items, it lost $2.65 per share. That was worse than the average forecast of a $2.08 per share loss from 15 analysts surveyed by FactSet.
Investors, however, seemed prepared for the bad news. In premarket trading, shares of American Airlines Group Inc. rose 1%.
Parker highlighted American’s efforts to bolster its liquidity — building up enough cash, it hopes, to ride out the pandemic — including getting $5.8 billion in federal aid to help cover payroll costs through September.
American estimated that it ended March with $6.8 billion in cash and other liquidity, including $2 billion that it raised during the first quarter, and will have $11 billion at the end of June.
The Fort Worth, Texas-based airline has cut its flying schedule by 80% in April and May and 70% in June. It has grounded hundreds of planes. Nearly 39,000 employees have accepted early retirement, partially paid leave or fewer hours of work. Cheaper fuel caused by the collapse in energy prices will contribute to a reduction of more than $12 billion in its 2020 spending, the airline said.
“There is no way to overstate the gravity of the situation for the airline industry, and difficult decisions lie ahead for all of us,” Parker and company President Robert Isom said in a letter to employees. They said they are confident American and the airline industry “will fight through this successfully.”
American’s loss dwarfed the $534 million loss reported last week by Delta Air Lines, which is slightly larger by revenue, and a $94 million loss posted by Southwest Airlines. United Airlines was scheduled to issue first-quarter figures later Thursday.