Reuters
ReutersNEW YORK (Reuters Breakingviews) - Concise insights on global finance.
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DESTINATION IN VIEW. American Airlines might have made the best out of a bad situation. The Texas-based air carrier said on Thursday its net loss declined to $1.3 billion in the first quarter this year, compared to $2.2 billion in the same quarter last year. That’s despite the fact that revenue https://s21.q4cdn.com/616071541/files/doc_news/American-Airlines-Reports-First-Quarter-2021-Financial-Results-CORP-FI-04-2021.pdf was off more than 53%. In other words, American is loss-making, but leaner.
It suggests the company used the last year to right-size costs. That’s important with a slow rebound in view. While the company, led by Chief Executive Doug Parker, is optimistic that corporate travel will return at the beginning of summer, it expects second-quarter revenue to be down 40% compared with the same period in 2019.
American will need revenue to come back – and it can’t wander back into being a bloated airline. But costs, now, are more in line with the future. At $39 billion, its enterprise value is more than it was pre-pandemic. With a leaner structure, it’s possible that even as a smaller company, American is more valuable for its recent tribulations. (By Lauren Silva Laughlin)
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