American Airlines net loss reaches $2.4 billion in the third quarter as the coronavirus pandemic slows down travel demand.
The airline company’s revenue fell by 73% in the three months ended Sept. 30 to $3.17 billion from $11.9 billion a year earlier.
American Airlines net loss swelled to $2.4 billion in the third quarter from a $425 million profit a year earlier. American recorded a per-share loss of $5.54, surpassing analysts’ prediction.
American shares dropped by 1.4% premarket. The company noted it has authorized a stock sale to increase up to $1 billion.
Plea for new aid
American Airlines is one of the airlines calling for the government to release a new assistance package as the industry struggles due to the pandemic.
According to the International Air Transport Association (IATA), airlines globally are expected to report a fall in revenues this year amounting to $418 billion.
Meanwhile, Airport Council International (ACI) World claimed that airports would experience a decline in income of around $104 billion.
IATA director general Alexandre de Juniac pointed out that financial aid packages granted by earlier this year by various governments to their respective aviation businesses were designed on the assumption that by this time, a recovery would be well underway.
De Juniac added that it was not the case currently and that the industry was still suffering deep “financial trauma”. He argued: “Without a second tranche of financial aid, many airlines will not survive the winter.”
On the other hand, ACI world director-general Luis Felipe de Oliveira said that a similar financial pressure is also being experienced by airports. De Oliveira claimed: “We could see airports going bankrupt in a very short period of time.”
He explained: “ACI and IATA are aligned in calling for urgent government action to introduce widespread and coordinated testing of passengers to enable quarantine requirements to be removed.”
“Without this action, it is not an exaggeration that the industry is facing collapse”, he added.
Aside from the decline in revenues, the IATA projected in June that the airline industry may lose $84 billion in 2020 as air travel dropped by 98% in April compared to last year.
“We think airlines are going to probably lose an unprecedented $84 billion in 2020,” Brian Pearce, chief economist for IATA, told CNBC.
“We’re really only just starting to see countries negotiating bilateral openings of markets. For example, the Trans-Tasma bubble between Australia and New Zealand, China and Singapore, as well as China and Korea.”
In July, UK flag carrier British Airways announced that it will be retiring all of its Boeing 747 aircraft amidst the dramatic decline in travel due to the coronavirus pandemic.
British Airways said it will retire its entire Boeing 747 fleet due to the sharp decline in air travel amidst the coronavirus pandemic. The British airline is the world’s largest operator of the 747 jumbo jets, having 31 aircraft in its fleet.
A spokesman for the airline said: “It is with great sadness that we can confirm we are proposing to retire our entire 747 fleet with immediate effect.”