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American Airlines (AAL) Expects Q1 Revenues to Decline 62%

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American Airlines Group Inc. AAL updated its guidance for first-quarter 2021.

With continued softness in air-travel demand, thanks to the coronavirus pandemic, the airline anticipates first-quarter total revenues to decline approximately 62% from that reported in the same period in 2019. The carrier’s previous guidance had called for a decrease of 60-65% from the 2019 levels.

Per an investor update, net loss in the same period is estimated to be approximately $1.2 billion-$1.3 billion. Excluding net special credits, the company expects the same to be approximately between $2.7 billion and $2.8 billion. Net loss per share, excluding net special credits, is estimated to be in the range of $4.29-$4.41. The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of $3.82.

American Airlines Group Inc. Price

American Airlines Group Inc. Price
American Airlines Group Inc. Price

American Airlines Group Inc. price | American Airlines Group Inc. Quote


Meanwhile American Airlines estimates capacity, measured in available seat miles (ASMs), to decline 43.4% in first-quarter 2021 compared with the 2019 level. Previously, the same was predicted to decrease around 45% from first-quarter 2019. Average fuel price (including taxes) per gallon is forecast to be approximately $1.70.

On a positive note, the carrier predicts average daily cash burn for the first quarter to be approximately $27 million per day (includes approximately $9 million per day in regular debt principal and cash severance payments), better than the previous guidance of around $30 million per day. The company stated that it witnessed positive cash burn in March, excluding approximately $8 million per day of regular debt principal and cash severance payments. Including this charge, the airline’s cash burn was approximately $4 million per day last month. The improving cash burn can be linked to the uptick in travel demand U.S. airlines have lately been seeing, owing to increased vaccinations and easing coronavirus-led restrictions.

On a separate note, American Airlines revised the terms of its agreement with The Boeing Company BA to defer and convert five 787-8 aircraft to 787-9 aircraft. The deliveries will now take place in 2023. Deliveries of the remaining 14 787-8 aircraft have been rescheduled to the end of first-quarter 2022. Additionally, the delivery of 18 Boeing 737 MAX aircraft have been postponed to 2023-2024 from 2021-2022.

Both American Airlines and Boeing carry a Zacks Rank #3 (Hold).

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