2020 balance sheet: $ 35 billion loss for the 6 largest US airlines

Three of the six largest US airlines on Thursday reported combined net losses of around $ 14 billion (€ 11.5 billion) for the full pandemic-marked 2020 year. This comes on top of the $ 20.9 billion (17 billion euros) in combined net losses already reported by the other three big companies.

– American Airlines, the largest US airline, said it lost $ 9.5 billion (€ 7.8 billion), including special accounting items, for the full year, and 2.2 billion dollars (1.8 billion euros) in the fourth quarter.
– Southwest Airlines, which carries more domestic passengers than any other U.S. airline, recorded a loss of $ 3.1 billion (2.5 billion euros) for the full year and $ 908 million (7, 5 million euros) in the fourth quarter.
– JetBlue Airways said it lost nearly $ 1.4 billion (€ 1.1 billion) for the full year and $ 381 million (€ 314 million) in the fourth quarter.

American Airlines shares opened up more than 40% Thursday morning before returning about half of that late morning gain. But Raymond James analyst Savanthi Syth said the big move is “clearly unrelated to its profits.”

Like other analysts, Savanthi Syth said that the large activity in the American Airlines stock market, which started on Wednesday, is due to traders applying a short squeeze on American Airlines, which has far the largest percentage of its stocks short among US carriers. In such a case, small institutional investors and individuals significantly increase the share price in order to create short-term profit opportunities through the sale of these shares, unlike hedge funds and others which have created large short positions in an attempt to profit from a company’s underperformance in the market.

Savanthi Syth also noted that comments from U.S. executives in a conference call with analysts and reporters on Thursday that they do not expect the first quarter of this year to produce revenue growth or production. demand from the disappointing fourth quarter, were likely an effort by the company to lower already overheated investor expectations of a recovery starting in the near term.

Unlike his counterparts at Delta Air Lines and United Airlines who earlier this month spoke more optimistically of a recovery in demand starting perhaps even before the start of the summer, US CEO Doug Parker said he saw no clear signs of such a recovery. “We had hoped that demand would increase, not so much by April, but for the summer, and that we would accelerate into the summer, which has not yet been the case,” said Doug Parker.

Vasu Raja, chief revenue officer for American Airlines, said international travel bookings have halved in the past two weeks, compared to the first two weeks of January. This, he suggested, is in reaction to new regulations around Covid-19 testing, traveler quarantines and even travel bans introduced in a number of countries.

American Airlines officials said the company reduced its rate of cash erosion to about $ 30 million (24 million) per day in the fourth quarter, from $ 100 million (82 million ‘euros) per day last April, at the start of the pandemic.

By including $ 9 billion (€ 7 billion) in federal grants and loans, plus an additional $ 13 billion (€ 11 million) raised through the sale of debt and stocks in 2020, minus With continued daily losses, the Fort Worth-based airline now plans to end the current quarter in March with about $ 15 billion (12 billion euros) in cash on hand.

Southwest Airlines, based in Dallas, lost money over an entire year for the first time since 1972, which was its first year of operation. The annual loss of what has now been the world’s most profitable airline for five decades is not surprising. But it illustrates how devastating the Covid-19 pandemic and the resulting near collapse in travel demand have been for airlines around the world.

Like his counterparts at other airlines, Gary Kelly, CEO of Southwest Airlines, has been pressed by analysts and reporters to report the company’s first quarter results, as he expected the economy to recover. request. But he cleverly avoided falling into the trap many others have set by speculating or outright predicting the start of a significant recovery in travel demand, in some cases as early as this spring.

“One goal, of course, would be to achieve zero cash burn by the end of 2021, but that is unpredictable,” Kelly said, adding later that “it’s all about demand. When will demand really resume? ”

“With encouraging news on the vaccine front, we hope to see a return to growth in demand this year, but until then we remain very cautious,” he said.

Nonetheless, by touting Southwest Airlines’ successes in reducing its operating costs during the pandemic in a way that will, to some extent, be sustained even after travel demand returns to something akin to the normal, Mr Kelly has made it clear that the company’s focus continues to emerge from the pandemic era as the country’s number one airline (which it was in many ways before the pandemic).

“I am encouraged by the fact that we continue to have many strengths and that we will rise to the top of the sector,” he said, highlighting the balance sheet, brand identity, operational efficiency and Southwest Airlines’ reputation for customer service, which is the best in the industry, and its now low but still substantial operating cost advantages over all of its traditional airline competitors.

Savanthi syth said that while Southwest Airlines ‘fourth quarter loss and overall operating performance exceeded analysts’ expectations, the airline’s comment “was slightly more cautious” than recent comments from other carriers over the months. to come up. She noted that Southwest Airlines has made it clear that its current trends in passenger booking “do not indicate any significant improvement until March.”

JetBlue Airways, which has suffered as much of its capacity is connected to New York, its hometown, where demand has been significantly lower than in other markets due to the virus’s disproportionate impact on this city and due to stricter quarantines in this state and other responses to the crisis, saw its revenue drop 67% from the fourth quarter of 2019. But this is actually a better performance of 3 percentage points over forecast and a 9 percentage point improvement over third quarter revenue decline.

CEO Robin Hayes said JetBlue Airways is very cautious about planning to add additional capacity to its operations in the spring and summer, and the second half of the year, as the company does not does not yet see signs of a recovery in construction demand that would justify such increases in capacity.

“We want to plan conservatively, cautiously. We don’t want to build a plan that is dependent on a huge recovery, ”he said, adding that it’s easier to increase capacity relatively quickly than to reduce it if the expected improvements in demand don’t materialize. not.

“At JetBlue Airways, we know how to quickly restore that extra capacity if the demand is there,” he said.