American Airlines posted a $2.2 billion net loss in the first quarter of 2020, its first quarterly loss since emerging from bankruptcy in 2013. The loss is a shift from $185 million profit recorded in the same period last year.
This comes as a result of the COVID-19 pandemic that has led to the suspension of international passenger flights.
According to the airline, it incurred losses of $2.65 per share in the quarter on revenue of $8.52 billion, against its target of $2.33-per-share loss on revenue of $8.9 billion.
Additionally, total operating revenue declined by nearly 20% to $8.5 billion.
The airline ended the quarter with $6.8 billion in available liquidity, but expects to complete the current quarter with $11 billion in cash thanks to government support and other balance sheet preservation efforts.
American airlines expects to reduce total operational and capital expenditures by $12 billion in 2020, in part by slicing capacity by 80% in April and May and by 70% in June. The airline is also retiring four aircraft types, including its fleets of Boeing 757s and 767s and Airbus A330-300s, and has suspended marketing and hiring campaigns.
Its overall cash position will be helped by a $4.75 billion government loan under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, for which it will have to pledge a portion of its assets as collateral.
Despite all these, the airline is receiving $5.8 billion in payroll aid, which prohibits airlines from cutting pay or jobs through 30th September 2020.
Already, about 4,500 workers have taken early retirement, with another 34,000 accepting partially paid leave for three to 12 months.
American Airlines is the world’s largest airline when measured by fleet size, scheduled passengers carried, and revenue passenger mile. American, together with its regional partners, operates an extensive international and domestic network with almost 6,800 flights per day to nearly 350 destinations in more than 50 countries.