American Airlines projects a full recovery of domestic business travel next year, executives said in an earnings call on Thursday.
Similar to what United Airlines executives reported on Wednesday, American's business travel demand "started to return in a meaningful way" during the second quarter, American Airlines president Robert Isom said. Domestic busines revenues were about 20 percent of 2019 levels in March, and in June, they increased to about 45 percent of 2019 levels, led by small and midsize business travel, he said.
Business travel from large corporate customers increased 80 percent in the second quarter compared with the first quarter, chief customer officer Alison Taylor said.
"It's been a steady recovery," she said. "Our travel remains less concentrated on peak days of the week, but the booking curve for corporate traffic continues to normalize toward 2019 levels."
In addition to the shift in the booking curve, there has been an increase in the traditional "business-style" itineraries, such as one-day trips or overnight trips with no checked bags, chief revenue officer Vasu Raja said.
Like its competitors, American Airlines expects a boost in business travel demand in the fall. About half of American's corporate accounts said they have lifted all travel restrictions, and two-thirds have plans to return employees to the office by the end of the year, Taylor said.
Companies that have already brought employees back to their offices typically have shown a lag of four to six weeks before a return to business travel, Raja said, so American expects a big uptick in October following a post-Labor Day broad return to the office. In particular, the carrier expects to see bookings grow from some of the markets that currently show some of the lowest booking volume, such as New York, Chicago and Washington, D.C., he said.
While domestic business travel should return to 2019 levels in 2022, international business travel should follow on a slower timeline, Isom said.
"As we go out and talk to CEOs in insurance, in financials, in consulting and accounting firms, everything tells us business is going to come back to where we'd seen it before," he said. "Maybe it's in different ways, but we feel really confident, starting with domestic in 2022."
For the second quarter, American reported $6.6 billion in passenger revenue and total revenue of $7.5 billion, up 87 percent compared with the first quarter. In the third quarter, American projects its total revenue will be down about 20 percent compared with the third quarter of 2019 with capacity down 15 percent to 20 percent.
American reported that its daily cash burn ended in the second quarter, turning into a cash build rate of about $1 million per day. It's become more aggressive in its goals to pay down debt and now expects it will reduce debt by more than $15 billion by the end of 2025, compared with previous plans of paying off $8 billion to $10 billion in that period. On Thursday, the carrier announced is paying off a $950 million spare parts loan scheduled to mature in April 2023.
The carrier reported net income of $19 million for the second quarter, compared with a net loss of $2.1 billion in the second quarter of 2020. The most recent quarter's income included money from the federal Payroll Support Program, and excluding that and other special items, American had a net loss of $1.1 billion during the quarter.
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