American Airlines said Thursday it lost $2.2 billion in the fourth quarter, compared to a $414 million net profit in the same period in 2019, as the COVID-19 pandemic continued to sack revenue.
For the full year, the Fort Worth-based airline lost $8.89 billion, compared to a $1.7 billion net profit in 2019.
Passenger revenue was $3.2 billion in the latest quarter, compared to $10.4 billion in the fourth quarter of 2019.
American said it ended the fourth quarter with about $14.3 billion of total available liquidity, and said it expected to end the first quarter of 2021 with about $15 billion of available liquidity, on cost controls and adjustments in capacity to meet traveler demand.
The airline said it has incorporated more than $1.3 billion of “permanent non-volume, non-fuel efficiency cost-saving measures” into its 2021 operating plan.
“Our fourth-quarter financial results close out the most challenging year in our company’s history,” Doug Parker, American’s chairman and CEO, said in a release.
“However, we couldn’t be prouder of the American Airlines team and the great things they accomplished last year. Through collaboration, resourcefulness and hard work, our team did its part to keep the economy moving. The American team flew more customers than any other airline in 2020, and they did so safely and with the utmost care.”
Parker said “2021 will be a year of recovery.
“While we don’t know exactly when passenger demand will return, as (COVID) vaccine distribution takes hold and travel restrictions are lifted, we will be ready,” he said. “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.”
During 2020, American took numerous steps to respond to the pandemic and strengthen its business, focusing on supporting employees, customers and its communities; cutting costs; and improving liquidity.
American:
- Enhanced its cleaning procedures at airports and aboard aircraft;
- Introduced a preflight COVID testing program to help re-open certain international travel markets;
- Began rolling out the mobile wellness wallet solution VeriFLY, allowing travelers to more easily understand COVID testing and documentation requirements for their destinations, and streamline airport check-in through digital verification;
- Eliminated fees for ticket changes on domestic and international itineraries when traveling from North and South America, except for basic economy fares;
- Instituted mileage redeposits for canceled award bookings;
- Made it easier for top-tier customers to earn AAdvantage elite status in 2020 and 2021;
- Paused mileage expiration through June 30, 2021, and extended 2020 AAdvantage status into early 2022 for all members;
- Launched the company’s first cargo-only flights since 1984 to transport critical goods, including COVID-19 vaccine, and increased service to include 41 destinations for strategic cargo-only opportunities; and,
- Announced its goal to reach net-zero carbon emissions by 2050.
To reduce costs and conserve cash, American:
- Removed more than $17 billion from its operating and capital budgets for 2020 primarily through reduced flying;
- Incorporated more than $1.3 billion of permanent non-volume, non-fuel efficiency cost-saving measures into 2021 operating plan;
- Retired five aircraft types (Embraer 190, Boeing 757, Boeing 767, Airbus A330 and Bombardier CRJ200), along with a number of older regional aircraft;
- Placed certain older Boeing 737-800 aircraft into temporary storage;
- Reached agreement with Boeing to secure rights to defer deliveries of 18 Boeing 737 MAX aircraft, and completed sale-leaseback transactions to finance its Airbus A321 aircraft deliveries in 2021;
- Reset its international capacity and network for 2021, including exiting 19 international routes from six hubs;
- Reduced non-aircraft capital expense by $700 million in 2020 and another $300 million in 2021 through reductions in fleet modification work, elimination of ground service equipment purchases, and pausing noncritical facility investments and IT projects;
- Introduced voluntary early retirement and long-term partially paid leave programs, under which more than 20,000 employees chose to participate;
- Reduced management and support staff by about 30%.
- Proceeded with furloughs. “American’s furloughed team members have since had their pay and benefits reinstated with the passage of a bipartisan COVID-19 relief package.”
To improve its liquidity, American:
- Reduced its daily cash burn rate from nearly $100 million in April 2020 to about $30 million in the fourth quarter;
- Secured about $9 billion in financial assistance through two rounds of federal legislation and executed an agreement with the U.S. Department of the Treasury through the CARES Act loan program that gives the company access to up to $7.5 billion of secured term loans, of which $550 million has been drawn;
- Raised more than $13 billion during the year through various other equity and debt offerings.
American reset its network in 2020 to play to the strengths of its hubs and take advantage of its younger, simplified fleet. The airline also established new partnerships with Alaska Airlines and JetBlue Airways, augmenting its presence on the West Coast and in the Northeast. “These partnerships will allow for efficient growth, including the launch of new service in 2021 between Seattle and London, Shanghai and Bangalore, and between New York and Tel Aviv and Athens.”
American said it will continue to match capacity to bookings trends. “Compared to the first quarter of 2019, American expects its first-quarter system capacity to be down 45%, with total revenue expected to be down 60 to 65%.”