AA, Southwest post deep losses, renew calls for aid

AA, Southwest post deep losses, renew calls for aid

Monitoring Desk

NEW YORK: American Airlines and Southwest Airlines each reported deep losses in the third quarter on Thursday, but said they would burn less cash in the months to come as leisure bookings show signs of recovery from this year’s coronavirus-driven collapse.

They warned, however, that passenger traffic would remain fragile until a COVID-19 vaccine was made widely available, and renewed calls for another $25 billion in government payroll support to protect jobs as lawmakers continue to wrangle over a broader COVID-19 relief deal.

The airlines also pushed forward with a campaign to persuade travelers that it is safe to fly.

Southwest said it would stop blocking middle seats in December, referencing recent medical research about the coronavirus showing that the combination of air filtration on airplanes combined with face masks “make the risk of breathing COVID-19 particles on an airplane is virtually non-existent.”

It said the practice of keeping middle seats open had bridged it from the early days of the pandemic, “when we had little knowledge about the behavior of the virus, to now.” In a study released last week, the US Department of Defense called the risk “very low.”

American Airlines said it expects its cash burn rate to fall to about $25 million to $30 million a day in the fourth quarter from about $44 million per day in the third quarter and $58 million per day in the second.

It ended the third quarter with $13.6 billion in available liquidity, after securing a total of $7.5 billion in federal loans and said it could also issue up to $1 billion of equity in an at-the-market offering to further bolster liquidity.

“These funds will be critical as we continue to fight for the future of our company,” American Chief Executive Doug Parker and President Robert Isom said in a memo to employees.

American posted a net loss of $2.40 billion, or $4.71 per share, in the third quarter ended Sept. 30, compared with a profit of $425 million, a year earlier. Total operating revenue fell to $3.17 billion from $11.91 billion.

Southwest, which reported a $1.2 billion loss, its biggest ever, has not tapped the federal loan fund and ended the quarter with $15.6 billion in liquidity.

The low-cost airline forecast fourth-quarter average core cash burn of about $11 million per day, compared with $16 million per day in the third quarter and $23 million per day in the second.

Going forward, Southwest said it would need to double the revenue it booked in the third quarter in order to halt its cash burn. (Reuters)

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