American, Southwest post record annual losses as recovery remains elusive

American Airlines flight 718, the first U.S. Boeing 737 MAX commercial flight since regulators lifted a 20-month grounding in November, takes off from Miami, Florida, December 29, 2020.
Marco Bello | Reuters

American Airlines on Thursday reported a record quarterly loss and faces difficult months ahead as new travel restrictions and a slow rollout of vaccines cloud hopes for a near-term recovery.

American posted a net loss of $2.2 billion in the fourth quarter. Revenues tumbled more than 64% to $4.03 billion, compared with $11.3 billion. Sales were above analysts’ forecasts for $3.88 billion for the quarter. Shares were up 9% in premarket trading.

Fort Worth, Texas-based airline said it expects capacity in the first quarter of 2021 to be down 45% compared with 2019 and revenues to be off 60% to 65% lower.

Here’s how American performed in the fourth quarter, compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

  • Adjusted EPS: a loss of $3.86 versus an expected loss of $4.11.
  • Revenue: $4.03 billion versus expected $3.88 billion in revenue.

American Airlines executives will discuss the company’s results and outlook on an 8:30 a.m. ET call.

Southwest Airlines, earlier Thursday, reported its first annual loss since 1972 and said it would remain conservative with capacity through March citing weak demand.

Dallas-based Southwest expects average core cash burn of about $17 million a day in the first quarter, “as a result of continued softness in demand and a seasonally weaker travel period in January and February 2021, as well as rising fuel prices.” That’s up from the $12 million a day in in the last three months of 2020.

It forecast January revenue will be down 65% to 70% compared with 2019, slightly better than a decline of as much as 75% it previously forecast after cancellations stabilized. Southwest said February revenues will likely fall 65% to 75% compared with the same month of 2019, before the coronavirus pandemic sapped travel demand.

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