Individuals Southwest Have Recorded Annual Losses As The Restoration Stays Elusive

Southwest Airlines Flight 1117 from St. Louis lands at Boston Logan International Airport on March 13, 2019. (Photo by John Tlumacki / The Boston Globe via Getty Images)

John Tlumacki | The Boston Globe | Getty Images

American Airlines and Southwest Airlines reported record annual losses on Thursday and anticipate weak bookings in the coming months as new travel restrictions and a slow roll-out of Covid vaccines hope for an early recovery.

US airlines combined lost more than $ 34 billion in 2020. A year in which airline CEOs repeatedly named the most difficult in airline history.

Southwest Airlines reported its first annual loss since 1972, saying that capacity will remain conservative through March as demand is weak. Americans lost a record $ 8.9 billion in 2020.

"We don't know exactly when we can go back to previous demand levels," said Doug Parker, CEO of American Airlines, speaking to analysts. "We know we are ready to weather the ongoing crisis, no matter how long the recovery takes. We ended the year with over $ 14 billion in total cash available."

American posted a net loss of $ 2.2 billion in the fourth quarter. Revenue decreased more than 64% to $ 4.03 billion, compared to $ 11.3 billion a year ago. Revenue was $ 3.88 billion for the quarter, above analysts' forecasts. Stocks rose amid the hustle and bustle of retail buying stocks with large short interest. American has less interest in its stocks than any other US carrier. The share price rose 10% in midday trading.

American expects capacity to decrease 45% in the first quarter of 2021 compared to 2019 before the coronavirus pandemic weighed on demand for travel. For the first quarter, sales are expected to decline by 60% to 65% compared to the previous months of 2019.

The airlines have tried to cut costs and reduce their money consumption. However, executives warn that airlines will continue to bleed money until revenues recover.

Southwest expects an average core cash burn of around US $ 17 million per day for the first quarter, "due to persistent weak demand and a seasonally weaker travel period in January and February 2021, as well as rising fuel prices." That's more than the $ 12 million a day for the last three months of 2020.

According to Southwest, earnings will have to double from current levels to break even.

Sales are forecast to decrease 65% to 70% in January compared to 2019, slightly better than a 75% decrease previously forecast after cancellations stabilized. Southwest said February revenue is projected to decrease 65% to 75% compared to the same month of 2019.

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