Texas’ American Airlines, Atlanta’s Southwest on runway to recovery as cash burns dip



by   |  VIEW 816

Texas’ American Airlines, Atlanta’s Southwest on runway to recovery as cash burns dip

On Thursday, two of the largest US carriers, Fort Worth-based American Airlines and Atlanta-headquartered Southwest, had reported lower-than-anticipated losses over first fiscal quarter of the year that ended on March 31 and signalled a substantial scale of downturn in cash burns, pointing towards a sharp rebound in Summer bookings as an acceleration in vaccination push with more than half of entire US population having received at least one shot of pandemic vaccine, appeared to have stepped up Americans’ confidence to travel again.

According to Southwest Airlines’ quarterly earnings’ report released earlier in the day, the Atlanta-based budget US carrier had forecasted a daily core cash burn between $2-$4 million, down from a $13 million in daily cash burns reported on previous quarter, while the carrier had also raised its second-quarter capacity outlook and expected its Q2 bookings to rise about 90 per cent compared to the same time a year earlier.

Alongside this, American Airlines was quoted saying that the Texas carrier had witnessed a cash burn rate of $27 million per day in first quarter, though had also added that the airlines had burned about $4 million per day in March.

Americans, in tandem, expects its annual capacity to be down by 20%-25% this year compared to 2019.

Americans Airlines, Southwest report smaller-than-anticipated fall in quarterly profit

On top of that, while both US airlines’ operating revenues fell over 50 per cent in the latest quarter that ended on March 31, down from a plunge of 65 per cent registered on fiscal Q4, 2020, forecasting a gnarly landscape ahead for the aviation industry, Southwest President Thomas Nealon said, “In a normal year, at this point, we would expect to be around 60% booked for May roughly 35% or so booked for June and around 20% booked for July”.

Despite a better-than-anticipated quarterly earnings’ report with hints of further growth over the upcoming months, shares’ prices of Southwest fell about 1.5 per cent, while American Airlines shed more than 4.5 per cent given the carrier’s top-tier exposure in international travel, which is expected to remain tepid for an unforeseeable timeframe amid a third wave of pandemic outbreak on major G20 economies across the globe.