American Airlines sees encouraging demand trend

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American Airlines has transported an average of 127,000 passengers daily in June so far, up from a low of 32,000 passengers daily in April, as travellers once again take to the sky while the global coronavirus crisis enters its fourth month.

President and chief executive Doug Parker told the Fort Worth-based airline’s shareholders on 10 June that the carrier is encouraged by the recent rise in demand, even though it builds on a very low base.

American Airlines Boeing 787

Source: Max Kingsley-Jones/FlightGlobal

“There is definitely pent-up demand for travel as more states, business and attractions open up,” Parker says at the company’s annual shareholder meeting.

In July, the airline expects to fly 40% of its total pre-coronavirus capacity, equating to 55% of its pre-pandemic domestic capacity and 20% of previous international capacity, Parker says. Earlier this month, the carrier said steadily improving demand for domestic air travel in May prompted it to increase for July and August the frequency of flights from Dallas/Fort Worth and Charlotte to cities in Florida, along the Gulf Coast and in mountain regions.

The airline’s cash burn has gone down to $50 million daily, and is expected to fall further. “Thanks to aggressive management we now expect our June cash burn rate to $40 million per day and that’s a nice trend as well,” Parker tells shareholders.

Almost 40,000 employees have volunteered for leave or early retirement and the airline hopes to get through the crisis without any furloughs, Parker says.

“It’s a stretch goal, not a certainty and not a commitment. It’s a commitment to a goal, one that we will work hard to get to,” he says. “The requirement is to make sure we have our airline and our staffing right to the size of the airline and the demand.”

American was approved by the US Department of the Treasury to receive $5.8 billion (including a $4.1 billion grant and $1.7 billion loan) in financial aid via the US government’s relief package. Those funds are earmarked for workforce payroll expenses, and Parker said negotiations with the Treasury to access another $4.75 billion in government loans are ongoing.