American Airlines Group Inc (NASDAQ:AAL) reported a $2.1 billion loss in Q2 2020 compared to $662 million profit in Q2 2019. Without considering the aid provided by the government, its losses in the quarter are $3.4 billion.
Cancellation at 80%
The rising cases of coronavirus are forcing passengers to cancel their bookings. As a result, American Airlines suffered an 80% drop in bookings despite the expected recovery in air travel. To capture demand in summer, American Airlines is operating more flights compared to its peers. According to a communiqué on Thursday, the company will reduce bookings.
Business travel takes a toll
American Airlines executives said business travel bookings usually see a rise after Labor Day. But, no sign of improvement in bookings for business travel is seen. Doug Parker, CEO of American Airlines, who is on a call discussing Q2 2020 results, said the airline is suffering because of an ongoing coronavirus crisis.
COVID-19 pandemic pushes airlines into the worst crisis
The ongoing coronavirus pandemic pushed prominent airlines like United Airlines Holdings Inc (NASDAQ:UAL), Southwest Airlines Co (NYSE:LUV), and Delta Air Lines, Inc. (NYSE:DAL) that posted profits for decades into a deep crisis. They are not expected to see a recovery soon because the demand is ebbing this summer.
Job cuts on the cards
Travel will not recover to last year’s levels unless a proven vaccine is available for the public or until a vacation. The federal aid expects to run out by September 2020, and it results in several job cuts.
According to CRO of American Airlines, Vasu Raja, new reservations versus cancellations are declined by up to 80%. The net bookings in Sunbelt states also saw a drop in bookings by up to 40%.
American Airlines will maintain connectivity to major centers in Charlotte and Dallas while cutting markets that rely on business travel.
Doug said the company generated some revenues by operating more flights to cater to summer demand. The demand increased by 6 times in June compared to April this year. American Airlines expects a drop of 60% in demand in Q3 2020 compared to Q3 2019.
Southwest Airlines posted a $915 million loss in Q2 2020. It enjoyed some respite by improving revenues in June and May because of a pickup in demand.
