American Airlines’ AAL first-quarter 2021 loss puts it in the same boat of Alaska Air Group ALK, United Airlines UAL and Delta Air Lines DAL as all suffered a similar setback.
The airline incurred a loss (excluding $2.35 from non-recurring items) of $4.32 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $4.35. However, quarterly loss per share was wider than the year-ago loss of $2.65. Moreover, operating revenues of $4,008 million slumped 52.9% year over year and also fell short of the Zacks Consensus Estimate of $4,031 million.
Passenger revenues, which accounted for bulk of the top line (79.3%), plunged 58.6% to $3,179 million. Cargo revenues surged in excess of 100% to $315 million, driven by the carrier’s focus on its cargo unit in the face of dwindling passenger revenues. Cargo yield per ton mile jumped 76% in the first quarter of 2021. Other revenues dropped 25.3%.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 22.6% year over year to 10.61 cents in the reported quarter on a consolidated basis. Further, passenger revenue per available seat miles (PRASM) fell 31.9% to 8.42 cents in the period. Moreover, consolidated yield was down 16.8%.
While consolidated traffic (measured in revenue passenger miles) plummeted 50.3%, capacity (measured in average seat miles) contracted 39.2%. Consolidated load factor (percentage of seats filled by passengers) decreased 13.2 percentage points to 59.5% as traffic decline was more than the capacity reduction.
Total operating costs (on a reported basis) declined 51.9% year over year to $5,323 million with expenses pertaining to aircraft fuel and related taxes tumbling 42%. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) shot up 21.1% to 19.19 cents due to weak capacity. With a portion of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 37.2%. Average fuel price per gallon (including related taxes) also fell 7.4% to $1.70.
American Airlines Group Inc. Price, Consensus and EPS Surprise
American Airlines Group Inc. price-consensus-eps-surprise-chart | American Airlines Group Inc. Quote
Driven by its cost-control initiatives, American Airlines, currently carrying a Zacks Rank #3 (Hold), succeeded in reducing its daily cash burn rate from nearly $100 million in April 2020 to approximately $27 million in the March quarter. Also, it exited the first quarter with available liquidity of $17.3 billion. The carrier expects to end the second quarter of 2021 with total available liquidity worth $19.5 billion.
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Moreover, American Airlines expects system capacity for the March quarter to nosedive in the 20-25% range from the figure reported in second-quarter 2019. Total revenues in the second quarter of 2021 are anticipated to decline 40% from the level recorded in second-quarter 2019. Fuel cost per gallon in second-quarter 2021 is expected in the $1.84-$1.89 band. Fuel gallon consumption is expected to be $873 million. CASM excluding fuel and special items in the June quarter is expected to increase in the 13-17% range from the second-quarter 2019 number. Pre-tax margin (excluding net special items) in the June quarter is anticipated between -27% and -30%.
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