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American Airlines' (AAL) Loss Widens in Q1, Revenues Fall
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American Airlines' (AAL - Free Report) first-quarter 2020 loss made it join the likes of Delta Air Lines (DAL - Free Report) and Southwest Airlines (LUV - Free Report) , which too met a similar fate.
American Airlines Group Inc. Price and EPS Surprise
The airline incurred a loss (excluding $2.61 from non-recurring items) of $2.65 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year ago quarter. Results in first-quarter 2020 were hurt by the coronavirus-led drop in air-travel demand.
Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million. Passenger revenues, which accounted for bulk of the top line (90.2%), decreased 20.5%. Cargo revenues also plunged 32.7% to $147million, mainly due to 30.2% lower cargo ton miles. Other revenues slid 2.9%.
Total revenue per available seat miles (TRASM: a key measure of unit revenues) decreased 13.6% to 13.71 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 14.6% to 12.37 cents in the first quarter. Moreover, consolidated yield dipped 3.5%.
While consolidated traffic (measured by revenue passenger miles) was down 17.6%, capacity (measured by average seat miles) contracted 6.9%. Consolidated load factor (percentage of seats filled by passengers) decreased 950 basis points to 72.7% as traffic decline was more than capacity contraction.
Total operating costs (on a reported basis) were up 8.4% year over year to $11,064 million with expenses pertaining to salaries, wages and benefits rising 1.6%. Consolidated operating costs per available seat miles (CASM: excluding fuel and special items) increased 9.2% to 12.97 cents. CASM (including fuel and special items) increased 16.3%. Average fuel cost per gallon (on a consolidated basis: including taxes) declined 10.1% to $1.83.
Other Details
Due to the coronavirus pandemic, American Airlines expects the cash-burn rate for the June quarter to be roughly $70 million per day. Driven by its cost-reduction initiatives, cash-burn rate (on a daily basis) is expected to decline over time to roughly $50 million per day for the month. Also, the company expects to have approximately $11 billion in terms of liquidity for the second quarter.
Moreover, to mitigate this extremely bleak-demand scenario, the Zacks Rank #3 (Hold) carrier reduced system capacity by approximately 80% in both April and May and 70% for June.
Even though airlines have had a rough ride in the first quarter, we note that railroad Union Pacific’s (UNP - Free Report) first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line improved 11.4% on a year-over-year basis.
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American Airlines' (AAL) Loss Widens in Q1, Revenues Fall
American Airlines' (AAL - Free Report) first-quarter 2020 loss made it join the likes of Delta Air Lines (DAL - Free Report) and Southwest Airlines (LUV - Free Report) , which too met a similar fate.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
The airline incurred a loss (excluding $2.61 from non-recurring items) of $2.65 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year ago quarter. Results in first-quarter 2020 were hurt by the coronavirus-led drop in air-travel demand.
Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million. Passenger revenues, which accounted for bulk of the top line (90.2%), decreased 20.5%. Cargo revenues also plunged 32.7% to $147million, mainly due to 30.2% lower cargo ton miles. Other revenues slid 2.9%.
Total revenue per available seat miles (TRASM: a key measure of unit revenues) decreased 13.6% to 13.71 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 14.6% to 12.37 cents in the first quarter. Moreover, consolidated yield dipped 3.5%.
While consolidated traffic (measured by revenue passenger miles) was down 17.6%, capacity (measured by average seat miles) contracted 6.9%. Consolidated load factor (percentage of seats filled by passengers) decreased 950 basis points to 72.7% as traffic decline was more than capacity contraction.
Total operating costs (on a reported basis) were up 8.4% year over year to $11,064 million with expenses pertaining to salaries, wages and benefits rising 1.6%. Consolidated operating costs per available seat miles (CASM: excluding fuel and special items) increased 9.2% to 12.97 cents. CASM (including fuel and special items) increased 16.3%. Average fuel cost per gallon (on a consolidated basis: including taxes) declined 10.1% to $1.83.
Other Details
Due to the coronavirus pandemic, American Airlines expects the cash-burn rate for the June quarter to be roughly $70 million per day. Driven by its cost-reduction initiatives, cash-burn rate (on a daily basis) is expected to decline over time to roughly $50 million per day for the month. Also, the company expects to have approximately $11 billion in terms of liquidity for the second quarter.
Moreover, to mitigate this extremely bleak-demand scenario, the Zacks Rank #3 (Hold) carrier reduced system capacity by approximately 80% in both April and May and 70% for June.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bright Spot in Transportation
Even though airlines have had a rough ride in the first quarter, we note that railroad Union Pacific’s (UNP - Free Report) first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line improved 11.4% on a year-over-year basis.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>