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American Airlines (AAL) Posts Q2 Loss, Suffers Revenue Dip Y/Y

American Airlines' AAL second-quarter 2020 loss puts it in the same bracket of Alaska Air Group ALK, United Airlines UAL and Southwest Airlines LUV, which too met a similar fate.

All the above-mentioned stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Airlines incurred a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. However, the company delivered earnings per share of $1.82 in the year-ago quarter. Results in the second quarter were hurt by the coronavirus-induced air-travel demand woes.

American Airlines Group Inc. Price, Consensus and EPS Surprise

American Airlines Group Inc. Price, Consensus and EPS Surprise

American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote

Operating revenues of $1,622 million slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), plunged 89.9% to $1,108 million. Cargo revenues also declined 41% to $130 million, mainly due to 72.6% lower cargo ton miles. Other revenues dropped 47.2% as well.

Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 42.6% to 9.5 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 57.4% to 6.48 cents in the period. Moreover, consolidated yield was down 12.8%.

While consolidated traffic (measured in revenue passenger miles) plummeted 88.5%, capacity (measured in average seat miles) contracted 76.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 44.3 percentage points to 42.3% as traffic decline was more than capacity reduction.

Total operating costs (on a reported basis) declined 62% year over year to $4,108 million with expenses pertaining to aircraft fuel and related taxes tumbling 89.1%. Consolidated operating costs per available seat mile (CASM: excluding fuel and special items) skyrocketed more than 100% to 32.04 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 76.3% to 275 million. Average fuel price per gallon (including related taxes) also declined 47.5% to $1.13.

Other Details

Driven by its cost-control initiatives, American Airlines slashed its cash-burn rate to roughly $30 million per day in June from $100 million in April. The company’s cash-burn rate in the June quarter was approximately $55 million per day, comparing favorably with its previous forecast of $70 million per day. Also, it exited the same time frame with available liquidity of $10.2 billion.

Moreover, American Airlines expects system capacity for the September quarter to nosedive nearly 60% on a year-over-year basis.

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