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'Most challenging time in our industry’s history': American Airlines reports $2.4 billion loss in third quarter

The airline expects system capacity to be down more than 50% year-over-year in the fourth quarter, while long-haul international capacity will be down 75%.
Credit: AP
FILE - In this June 16, 2020 photo, travelers wear masks as they wait at the American Airlines ticket counter in Terminal 3 at O'Hare International Airport in Chicago. (AP Photo/Nam Y. Huh)

Fort Worth-based American Airlines saw a loss of $2.4 billion during the third quarter, the company announced in its earnings report Thursday. 

Its revenue was down to $3.2 billion, a 73% decrease year-over-year for the quarter.

The company was able to reduce its daily cash burn to $44 million for the third quarter, down from $58 million per day in the second quarter, and expects it to continue to decrease in the fourth quarter to around $25 to $30 million a day. 

While American reported improved passenger demand and load factors in the quarter, both were "significantly below" that of 2019, the report said. 

The airline expects system capacity to be down more than 50% year-over-year in the fourth quarter, while long-haul international capacity will be down 75%.

“The American Airlines team is doing a remarkable job taking care of our customers and each other during the most challenging time in our industry’s history," CEO Doug Parker said in a news release with the report.

American decided to furlough 19,000 employees on Oct. 1 "absent an extension of the CARES Act Payroll Support Program." The airline also saw 20,000 employees opt for "early outs" or long-term leave.

"The company, along with its union partners, continues to aggressively fight for an extension of the PSP that would allow the airline to bring back those furloughed employees and reinstate service to small- and medium-sized markets that have suffered without the extension of funds," the report said.

“We have a long road ahead and our team remains fully engaged and focused not just on managing through the pandemic, but on making sure we are prepared for when demand returns," Parker said.

The company has more than doubled its cargo-only flights from August to September, according to the report, with cargo revenue at $207 million in the third quarter. That revenue was flat year-over-year while American was dealing with a 59% reduction in total available seat miles. 

"To date, these cargo flights have helped the airline’s customers move more than 85 million pounds of critical goods around the world amidst the COVID-19 outbreak," the report said.  

The airline has also removed more than 150 aircraft from its fleet. It has placed some planes into temporary storage and permanently retired all 15 of its Airbus A330-200 aircraft. 

The company also increased its loan capacity in October to $7.5 billion through the CARES Act loan program, according to the report, and finalized a $5.5 billion loan agreement with the Department of the Treasury. 

"We are confident that the continued efforts of our team and the actions we have taken will drive customer confidence and strengthen our company for the future,” Parker said.