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Fort Worth-based American Airlines reported a second-quarter net loss of $2.1 billion the company announced Thursday, with operating revenues down 86.4% year-over-year in the quarter.
When excluding net special items, that loss was an even-greater $3.4 billion.
Doug Parker, the company's CEO, described it as "one of the most challenging quarters in American’s history” while much of the U.S. shutdown in March and April in response to the COVID-19 pandemic.
The result "caused severe disruptions to the global demand for air travel," Parker said in a news release.
The company's operating revenue went down to $1.6 billion in the second quarter, down from nearly $12 billion for the same period in 2019.
The airline saw passenger demand bottom out in April. It has since improved, though demand is still far below what it was in 2019, the release said.
Similar to Southwest Airlines, which also released its earnings report Thursday, the company's increase in demand seen in May and June, weakened in July as COVID-19 cases rise across the country.
American expects its third-quarter to see capacity down about 60% year-over-year as a result.
During the second quarter, the company's cash burn rate was around $55 million a day, according to the release.
The company had a daily cash burn rate of nearly $100 million per day in April, the release said, which had since gone down to about $30 million in June. It credited its cost-reduction efforts for the drop, along with higher-than-forecasted revenue.
The company took several major steps to reduce its costs and preserve cash as a result of the decrease in operating revenue, and expects to cut its 2020 expenditures by more than $15 billion, the release said.
That included offering employees voluntary leave-of-absence and early-out programs. More than 41,000 employees decided to retire early, reduce their work schedule or go on a partially paid leave as a result, the release said.
The company also reduced its management and support staff team by about 5,100 positions, which was 30% of the team.
But the airline still expects to have more than 20,000 employees too many on its payroll to operate its fall schedule, the release said.
American did work with the federal government to get a $4.75 billion secured loan, which the company expects to be finalized in the third quarter. The loan was a part of the Coronavirus Aid, Relief, and Economic Security, or CARES, Act passed by Congress earlier this year.
American also retired dozens of older aircraft and put others into temporary storage, essentially removing 150 planes from its fleet. The airline plans to eliminate 19 international routes from six hubs in 2021 as well as it expects long-haul international capacity to be down 25% from 2019 in the summer of 2021.
When asked whether it was the right choice to resume flying at full capacity during the second quarter, officials said they felt it was the right thing to do for the airline.
“This is a crisis, we’re all trying to figure out what works best for our individual airlines,” Parker said.
The company has put a number of safety measures in place as the pandemic continues, like mandating face coverings for customers and employees. American has also begun to use electrostatic spray inside each of its aircraft every seven days, considered a quick and highly effective way to kill bacteria and viruses.
In addition, American has started to contact customers whose flights may be full to allow them to switch to a more open flight at no cost, the release said, among other changes to give customers more flexibility.
“There is much uncertainty ahead, but we remain confident we will emerge from this crisis more agile and more efficient than ever before," Parker said.
The company held an earnings call to discuss the report Thursday morning.
Airline officials said until there is a vaccine for COVID-19, they do not anticipate travel to resume to its previous rate.
“As horrible as this crisis is – the one opportunity it has given us is to take the largest airline in the world and shut it down and start it from scratch. That allows us only to add back what makes sense,” Parker said when asked about his three-year plan for the company.
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