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American Airlines (AAL) Posts Q2 Loss, Suffers Revenue Dip Y/Y
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American Airlines' (AAL - Free Report) second-quarter 2020 loss puts it in the same bracket of Alaska Air Group (ALK - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) , which too met a similar fate.
American Airlines incurred a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. However, the company delivered earnings per share of $1.82 in the year-ago quarter. Results in the second quarter were hurt by the coronavirus-induced air-travel demand woes.
American Airlines Group Inc. Price, Consensus and EPS Surprise
Operating revenues of $1,622 million slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), plunged 89.9% to $1,108 million. Cargo revenues also declined 41% to $130 million, mainly due to 72.6% lower cargo ton miles. Other revenues dropped 47.2% as well.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 42.6% to 9.5 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 57.4% to 6.48 cents in the period. Moreover, consolidated yield was down 12.8%.
While consolidated traffic (measured in revenue passenger miles) plummeted 88.5%, capacity (measured in average seat miles) contracted 76.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 44.3 percentage points to 42.3% as traffic decline was more than capacity reduction.
Total operating costs (on a reported basis) declined 62% year over year to $4,108 million with expenses pertaining to aircraft fuel and related taxes tumbling 89.1%. Consolidated operating costs per available seat mile (CASM: excluding fuel and special items) skyrocketed more than 100% to 32.04 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 76.3% to 275 million. Average fuel price per gallon (including related taxes) also declined 47.5% to $1.13.
Other Details
Driven by its cost-control initiatives, American Airlines slashed its cash-burn rate to roughly $30 million per day in June from $100 million in April. The company’s cash-burn rate in the June quarter was approximately $55 million per day, comparing favorably with its previous forecast of $70 million per day. Also, it exited the same time frame with available liquidity of $10.2 billion.
Moreover, American Airlines expects system capacity for the September quarter to nosedive nearly 60% on a year-over-year basis.
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American Airlines (AAL) Posts Q2 Loss, Suffers Revenue Dip Y/Y
American Airlines' (AAL - Free Report) second-quarter 2020 loss puts it in the same bracket of Alaska Air Group (ALK - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) , which too met a similar fate.
All the above-mentioned stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Airlines incurred a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. However, the company delivered earnings per share of $1.82 in the year-ago quarter. Results in the second quarter were hurt by the coronavirus-induced air-travel demand woes.
American Airlines Group Inc. Price, Consensus and EPS Surprise
American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote
Operating revenues of $1,622 million slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), plunged 89.9% to $1,108 million. Cargo revenues also declined 41% to $130 million, mainly due to 72.6% lower cargo ton miles. Other revenues dropped 47.2% as well.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 42.6% to 9.5 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 57.4% to 6.48 cents in the period. Moreover, consolidated yield was down 12.8%.
While consolidated traffic (measured in revenue passenger miles) plummeted 88.5%, capacity (measured in average seat miles) contracted 76.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 44.3 percentage points to 42.3% as traffic decline was more than capacity reduction.
Total operating costs (on a reported basis) declined 62% year over year to $4,108 million with expenses pertaining to aircraft fuel and related taxes tumbling 89.1%. Consolidated operating costs per available seat mile (CASM: excluding fuel and special items) skyrocketed more than 100% to 32.04 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 76.3% to 275 million. Average fuel price per gallon (including related taxes) also declined 47.5% to $1.13.
Other Details
Driven by its cost-control initiatives, American Airlines slashed its cash-burn rate to roughly $30 million per day in June from $100 million in April. The company’s cash-burn rate in the June quarter was approximately $55 million per day, comparing favorably with its previous forecast of $70 million per day. Also, it exited the same time frame with available liquidity of $10.2 billion.
Moreover, American Airlines expects system capacity for the September quarter to nosedive nearly 60% on a year-over-year basis.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>