American Airlines announced on Tuesday, April 13th that its overall cash flow status flipped from a negative deficit to a positive one and is a good sign for the airline that its current flight operations are making money, but most importantly are profitable. The positive cash flow also highlights an unprecedented increase in air travel demand as many US airlines are recovering much quicker than they had anticipated.
However, this positive cash flow figure is still on a cost-adjusted basis and does not take into account repayments for loans and bailouts, in addition to employee early retirement and severance packages. American Airlines stated that it spends roughly about $8 million per day on these repayments alone.
American Airlines also confirmed that its average daily cash burn expenditure was significantly lower and was roughly only about $4 million per day compared to almost $30 million for the previous quarter. American Airlines is optimistic about Q2 for 2021 and predicts that demand will be about 62% when compared with 2019 levels for the same fiscal quarter. The airline stated that it still expects to post a first-quarter loss of about $2.7 to $2.8 billion dollars, however, this first-quarter loss could have been higher without the financial assistance from the United States’ payroll support program, which was extended into early 2021.
American Airlines had previously forecasted demand to be around 38-40% of 2019 levels, however, the announcement of a new revised forecast upwards of 60% is very promising news for the US aviation industry. As passenger demand continues to increase this will allow airlines to recover a lot quicker than previously predicted. This should allow them to bring back people into the industry who were furloughed or who voluntarily left to help alleviate some of the further financial burden caused by the sharp drop in air travel demand back in 2020.
Meanwhile, American Airlines is continuing to work with US aircraft manufacturer, Boeing regarding changing some of its new aircraft delivery deferral dates. The aircraft that will be deferred by American Airlines will most likely be both the Boeing 737 MAX and 787. These aircraft delivery deferrals could be pushed out until 2022 or 2023 when air travel demand is expected to pick up even further.
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Source: https://aeronewsx.com/american-airlines-sees-positive-cash-flow-in-march/?utm_source=rss&utm_medium=rss&utm_campaign=american-airlines-sees-positive-cash-flow-in-march
