American Airlines Higher Following Better Than Expected Losses

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Shares in US airliner American Airlines are trading slightly higher pre-market on Friday following a better than expected loss in Q2. The group posted losses of -$4.82 per share versus expected losses of -$7.84 per share.

Revenues were also a little better than expected. These came in at $1.62 billion versus expectations of a $1.44 billion reading over the quarter. Despite the better reading, revenues were still down by 86% over the quarter.

CEO Highlights Uncertainty

In a statement released by the company, chairman and CEO Doug Parker said:

“This was one of the most challenging quarters in American history. Covid-19 and the resulting shutdown of the US economy have caused severe disruptions to the global demand for air travel.”

Looking ahead, American said:

“There is much uncertainty ahead, but we remain confident we will emerge from this crisis more agile and more efficient than ever before.”

It has been a particularly challenging period for airlines around the globe with the travel restrictions put in place during the height of the pandemic causing a huge loss of service across many countries, including the US.

Daily Cash Burn Less Than Expected

American reported that it had managed to reduce its daily cash burn rate to an average of $55 million, beating expectations of the $70 million forecast. This comes on the back of American saying, three weeks ago, that it had slashed its daily cash burn from $100 million per day in June to $35 million per day in April.

In total, American reported that it had ended the quarter with around $10.2 billion in cash. The company also noted that it expects to close on a $4.75 billion Treasury Department loan over the third quarter.

Parker noted:

“We have moved swiftly to improve our liquidity, conserve cash and ensure customers are safe when they travel.”

American had noted earlier in the month that it is overstaffed by around 20,000 employees given the current drop-in service and demand. However, US airlines are prohibited, under the terms of the Treasury department loan, from laying off any employees through September. If the situation doesn’t materially improve by then, however, it is likely that we will see these layoffs come to fruition.

American Holding Above Support Level

Shares in American have moved back below the 13.33 level for now, which is holding as resistance. However, while the 9.04 level holds as support, there is an interim bottom in play. This means that prices are likely to continue to trade in a sideways range for now.

Should price break back above the 13.33 level, the bearish trend line will be the next technical region to monitor.

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