American Airlines has first cash profit of pandemic

An American Airlines ticket agent standing behind a splatter guard checks in travelers at O’Hare International Airport on Nov. 12. John J. Kim/Chicago Tribune/TNS

American Airlines says it generated a cash profit for the first time in 15 months on the strength of leisure travelers returning to flying in May, especially over the Memorial Day holiday.

Fort Worth-based American’s pandemic milestone is marked with plenty of caveats, and total revenue is still expected to be down 40% for the second quarter compared with the second quarter of 2019, but the carrier is indicating that it’s making progress toward being financially sustainable.

“Given the strength of summer bookings outlined above and based on preliminary internal results, for the first time since the pandemic began, the company generated cash for the month of May and expects to end the second quarter with more than $20 billion of total liquidity versus its previous guidance of $19.5 billion,” American wrote in an investor report filed Thursday.

American Airlines has posted $11.6 billion in losses since the beginning of 2020 when COVID-19 upended the airline and left carriers largely without passengers to support their massive operations. It drove Dallas-based Southwest to its first net loss in 49 years and pushed some foreign airlines into bankruptcy.

However, American’s operating profit doesn’t include increasing burdens such as debt repayments. That debt has now reached about $50 billion, although the company does have $20 billion in cash to help get it through any losses going forward.

American Airlines was in the worst financial position of any airline entering the pandemic, with more debt and a larger workforce than other carriers.

If current trends continue, American said demand for leisure travel could approach or exceed the record-breaking 2019 summer travel season.

But American noted that most of the passengers flying are taking leisure trips and that business traffic is slow to return.

“Although business demand continues to be weak, the company is starting to see increased demand among small- and medium-sized enterprises and certain large corporate customers,” American said.

Southwest Airlines CEO Gary Kelly has said that he thinks the airline may be able to generate a monthly profit in June.

Delta Air Lines CEO Ed Bastian said Thursday during an investor presentation that he hopes the airline can be profitable “in the back half of the year.”

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Tribune Wire

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