Published: Sat, January 30, 2021
Economy | By

Pandemic pushes Southwest to first full-year loss since 1972

Pandemic pushes Southwest to first full-year loss since 1972

The 12 months ahead will be a "year of recovery" from the Covid-19 crisis for American Airlines after revealing a $2.2 billion loss for the final quarter of 2020.

Although the Covid-19 vaccine could soon push demand for air travel, the earliest could be in the late summer or early fall.

The move comes after American Airlines Group painted a bleak picture of aviation in 2021.

"We are confident that the actions we have taken to improve our customer experience, enhance our network and increase our efficiency position us well for the future".

Reuters said the attention from these packs of investors explain a hard to understand 30% plus surge in American's share price since it was mentioned on the Reddit WallStreetbets forum. American is the most heavily shorted airline stock, according to data from S3.

American is scheduled to report fourth-quarter earnings on Thursday.

Helane Becker, an analyst at Cowen, said the company could use the share spike as an opportunity to pay down debt with an equity offering. However, new strains of the virus have triggered tighter rules for global travel in countries including the United States.

American Airlines ended the fourth quarter with about $14.3 billion in available liquidity. The average estimate of 13 analysts surveyed by Zacks Investment Research was for a loss of $1.69 per share.

American said it expects first-quarter revenue to lag 60% to 65% below year-ago levels.

These efforts have reduced daily cash burn to US$30 million in the fourth quarter from nearly US$100 million in April.

On an adjusted basis, the company reported a loss of $3.86 per share.

Quarterly revenue dropped more than 64%, to $4.03 billion in the fourth quarter, not quite as bad as Wall Street had expected.

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