American Airlines expects to emerge from the Covid-19 crisis a smaller airline, but it has no plans to abandon any of its hubs, executives said Thursday during the carrier's first-quarter earnings call.
"Capacity plans are severely complicated by the extreme uncertainty regarding the anticipated level of demand for air travel, not just for the next few months but for the next few years," American Airlines chairman and CEO Doug Parker said of plans for summer 2021 and beyond. "We at American decided to err on the side of being smaller than we might like, rather than larger."
As a part of that, American is retiring entire fleets of five aircraft types and some regional aircraft, which Parker said will cut American's 2021 fleet count by about 100 aircraft compared with previous plans. Retirements include nine Airbus A330-300 aircraft, 34 Boeing 757-200 aircraft, 17 Boeing 767-300ER aircraft, 20 Embraer E190 aircraft and 19 Bombardier CRJ200 aircraft.
Downsizing plans, however, do not include the closure of any hubs, SVP of network strategy Vasu Raja said.
"The core of our customer proposition is providing connectivity, and indeed that is something that we do not just versus all other airlines, but even all other network airlines," he said. "As dark and daunting as this crisis is, this is the moment for real clarity, so this is not about dismantling our customer proposition but sharpening it and refocusing it."
For the quarter, American's passenger revenue declined 20.5 percent year over year to $7.7 billion. Traffic was down 17.6 percent year over year, and capacity declined 6.9 percent. American reported a load factor of 72.7 percent for the quarter, down 9.5 percentage points year over year.
For the first quarter, American reported a loss of $2.9 billion, compared with a net income of $245 million in the first quarter of 2019.
Currently, American is burning through about $70 million per day, but by June, that should be down to $50 million per day, Parker said. Under that forecast—which assumes little to no increase in air travel demand in the current quarter—American should have about $11 billion in liquidity by the end of the second quarter, he said.
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