As American Airlines prepares for recovery later this year, it also is preparing for more of the same during the next few months.
In the fourth quarter, the carrier's passenger revenue was down 69.2 percent year over year to $3.2 billion, as total revenue declined 64.4 percent to $4 billion. While an improvement over the third quarter, when revenue was down 73 percent year over year, "the momentum we saw … was tempered by the surge in Covid-19 cases and increased travel restrictions in many parts of the country," American Airlines president Robert Isom said in an earnings call on Thursday.
The carrier's executives expect demand in the first quarter will look like the fourth quarter, with revenue down between 60 percent and 65 percent year over year and capacity down 45 percent year over year. The new U.S. Centers for Disease Prevention and Control requirements that all inbound international travelers test negative for Covid-19 prior to boarding already has slowed international bookings, Isom said, and like other carriers, American expects it will take widespread vaccinations before travel can truly recover.
In the meantime, Isom noted that American's Latin America network has been a "standout," and he expects travel to Latin America to recover more quickly than to the rest of the global regions. Passenger revenue for Latin America was down 61.7 percent year over year in the fourth quarter, compared with a 66 percent decline in domestic passenger revenue and declines higher than 90 percent in transatlantic and transpacific revenues.
Corporate travel demand remains a small fraction of usual levels, and in line with other carriers, American expects to see corporate demand begin its recovery closer to the end of 2021. In the meantime, American has been winning some new corporate contracts by leveraging its new partnerships with Alaska Airlines and JetBlue, Isom said.
American Airlines reported a net loss of $2.2 billion for the fourth quarter, compared with net income of $414 million in the fourth quarter of 2019, and its loss for the full year was $8.9 billion. The carrier's daily cash burn rate in the fourth quarter was about $30 million—down from about $100 million in April—and American expects to have about $15 billion in total available liquidity by the end of the first quarter.
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