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American Airlines (AAL) Expects Q1 Revenues to Decline 62%
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American Airlines Group Inc. (AAL - Free Report) updated its guidance for first-quarter 2021.
With continued softness in air-travel demand, thanks to the coronavirus pandemic, the airline anticipates first-quarter total revenues to decline approximately 62% from that reported in the same period in 2019. The carrier’s previous guidance had called for a decrease of 60-65% from the 2019 levels.
Per an investor update, net loss in the same period is estimated to be approximately $1.2 billion-$1.3 billion. Excluding net special credits, the company expects the same to be approximately between $2.7 billion and $2.8 billion. Net loss per share, excluding net special credits, is estimated to be in the range of $4.29-$4.41. The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of $3.82.
Meanwhile American Airlines estimates capacity, measured in available seat miles (ASMs), to decline 43.4% in first-quarter 2021 compared with the 2019 level. Previously, the same was predicted to decrease around 45% from first-quarter 2019. Average fuel price (including taxes) per gallon is forecast to be approximately $1.70.
On a positive note, the carrier predicts average daily cash burn for the first quarter to be approximately $27 million per day (includes approximately $9 million per day in regular debt principal and cash severance payments), better than the previous guidance of around $30 million per day. The company stated that it witnessed positive cash burn in March, excluding approximately $8 million per day of regular debt principal and cash severance payments. Including this charge, the airline’s cash burn was approximately $4 million per day last month. The improving cash burn can be linked to the uptick in travel demand U.S. airlines have lately been seeing, owing to increased vaccinations and easing coronavirus-led restrictions.
On a separate note, American Airlines revised the terms of its agreement with The Boeing Company (BA - Free Report) to defer and convert five 787-8 aircraft to 787-9 aircraft. The deliveries will now take place in 2023. Deliveries of the remaining 14 787-8 aircraft have been rescheduled to the end of first-quarter 2022. Additionally, the delivery of 18 Boeing 737 MAX aircraft have been postponed to 2023-2024 from 2021-2022.
Both American Airlines and Boeing carry a Zacks Rank #3 (Hold).
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American Airlines (AAL) Expects Q1 Revenues to Decline 62%
American Airlines Group Inc. (AAL - Free Report) updated its guidance for first-quarter 2021.
With continued softness in air-travel demand, thanks to the coronavirus pandemic, the airline anticipates first-quarter total revenues to decline approximately 62% from that reported in the same period in 2019. The carrier’s previous guidance had called for a decrease of 60-65% from the 2019 levels.
Per an investor update, net loss in the same period is estimated to be approximately $1.2 billion-$1.3 billion. Excluding net special credits, the company expects the same to be approximately between $2.7 billion and $2.8 billion. Net loss per share, excluding net special credits, is estimated to be in the range of $4.29-$4.41. The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of $3.82.
American Airlines Group Inc. Price
American Airlines Group Inc. price | American Airlines Group Inc. Quote
Meanwhile American Airlines estimates capacity, measured in available seat miles (ASMs), to decline 43.4% in first-quarter 2021 compared with the 2019 level. Previously, the same was predicted to decrease around 45% from first-quarter 2019. Average fuel price (including taxes) per gallon is forecast to be approximately $1.70.
On a positive note, the carrier predicts average daily cash burn for the first quarter to be approximately $27 million per day (includes approximately $9 million per day in regular debt principal and cash severance payments), better than the previous guidance of around $30 million per day. The company stated that it witnessed positive cash burn in March, excluding approximately $8 million per day of regular debt principal and cash severance payments. Including this charge, the airline’s cash burn was approximately $4 million per day last month. The improving cash burn can be linked to the uptick in travel demand U.S. airlines have lately been seeing, owing to increased vaccinations and easing coronavirus-led restrictions.
On a separate note, American Airlines revised the terms of its agreement with The Boeing Company (BA - Free Report) to defer and convert five 787-8 aircraft to 787-9 aircraft. The deliveries will now take place in 2023. Deliveries of the remaining 14 787-8 aircraft have been rescheduled to the end of first-quarter 2022. Additionally, the delivery of 18 Boeing 737 MAX aircraft have been postponed to 2023-2024 from 2021-2022.
Both American Airlines and Boeing carry a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the broader Transportation sector are Navios Maritime Partners LP (NMM - Free Report) and Landstar System, Inc. (LSTR - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Navios Maritime Partners and Landstar System have rallied more than 200% and 72% in a year’s time, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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