American reports $1.2B loss in fourth quarter
American Airlines said Tuesday that it lost around $1.2 billion in the fourth quarter of another pandemic-stricken year, a sign the carrier still has miles to go to recover from COVID-19 after nearly two years of struggles.
Still, the preliminary financial figures for the last three months of 2021 are better than analysts expected, giving some hope that American is gaining momentum toward eventual profitability.
The Fort Worth-based carrier said revenue was still down 17 percent compared with the pre-pandemic fourth quarter of 2019 and that it flew about 13 percent fewer flights this year as well. Losses will fall between $1.74 billion and $1.24 billion, slightly better than the company’s previous estimates.
American issued the projections ahead of its fourth-quarter and year-end earnings report a week from Thursday, when it is expected to finish another year with more than $2.5 billion in lost profits because of the COVID-19 pandemic.
“Capacity was lower due to flight cancellations during the holidays, but AAL’S cancellation rate was lower than the industry, as they previously reduced December capacity,” Cowen analyst Helane Becker said in an investor note Tuesday. “We continue to expect the next few months to be affected by variants of COVID as well as by higher fuel prices.”
The last three months of 2021 showed that recovering from the global health crisis has been anything but a smooth ride. American suffered through operational struggles after bringing back thousands of workers from furloughs, including major cancellation meltdowns in October after high winds in North Texas.
When COVID-19 cases increased to end the year, the company offered bonuses and other incentive pay to employees to pick up extra shifts and for “perfect attendance” in December. But like other carriers, American was still hit by a surge in sick calls among pilots to end the holiday season.
The company said incentive pay and cutbacks in flying hurt its profit margin in the fourth quarter.
American has about $15.8 billion in liquidity, most of that cash the airline hoarded during the early days of the pandemic as it worried about having enough free cash flow to cover the downturn. The company has accumulated about $46 billion in debt and plans to divert profits, when they come, to pay down the debt.
American managed small profits in the second and third quarters after a net loss of $1.3 billion in the first quarter. The airline lost $8.9 billion in 2020.