American Airlines' second-quarter revenue declined 86.4 percent year over year to $1.6 billion, though the carrier has slowed its cash burn rate more than expected.
While American in April had been burning through $100 million per day, it had reduced that rate by June to $30 million per day. The daily cash burn average for the second quarter was $55 million, lower than American's previous forecast of $70 million, which American credited to higher than expected revenue and cost-cutting measures.
Those measures have included removing more than 150 aircraft from its fleet, including retiring four aircraft types, and offering voluntary leaves of absence and early retirement programs for its employees. While more than 41,000 employees have taken such a package or a reduced work schedule, American still expects it will have 20,000 more employees than needed as of the fall.
In terms of revenue, American, like its competitors, saw "continual growth in demand" from April through June, though that more recently has plateaued as the Covid-19 spread intensifies in many parts of the United States, chairman and CEO Doug Parker said in an earnings call.
American has seen only a "token amount of business travel, and there's not a lot of indicators that's going to improve," chief revenue officer Vasu Raja said.
How business travel ultimately recovers for American remains to be seen, he said. Small and midsize business bookings from Texas, for example, grew by 300 percent from "almost zero"—about 10,000 per week—in April to about 45,000 per week by mid-June, when Texas had entered its third phase of reopening, Raja said. Over that same period, "corporate bookings didn't really change at all," he said.
"It's likely to think that for a period of time that business bookings as we've historically thought of them will be different, and companies are unlikely to go and resume their economic life, and there's a lot of uncertainty around what smaller companies will do," Raja said. "We are planning for some very conservative assumptions."
In a research note, Cowen analyst Helane Becker noted that American has been on the aggressive side in recent months in adding back capacity, but it now projects that capacity in the third quarter will be down 60 percent year over year, lower than Cowen's previous estimate of down 45 percent. The carrier already has announced plans for a "significantly smaller" international network into next year.
American reported a net loss of $2.1 billion for the second quarter, compared with a net income of $662 million in the second quarter of 2019.
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