American Airlines reports record liquidity in second-quarter 2021 results

©American Airlines

American Airlines (American) has released its financial results for the second quarter of 2021 in which it has posted a net profit of US$19 million. However, excluding net special items, the net loss for the quarter was -US$1.1 billion on a second-quarter revenue of US$7.5 billion, an 87% increase on the year’s first quarter. The Company recognized US$1.4 billion of net special credits before the effect of taxes in the second quarter of 2021 principally related to the financial assistance received pursuant to Payroll Support Program Agreements.

American ended the second quarter with approximately US$21.3 billion of total available liquidity, a record for the company. American anticipates keeping near-term liquidity at elevated levels but expects to step down its target liquidity to approximately US$10 billion to US$12 billion in 2022.It has also accelerated the deleveraging process with prepayment of US$950 million spare parts term loan. The Company plans to pay down approximately US$15 billion of debt by the end of 2025 and its daily cash burn rate turned positive for the second quarter to a cash build rate of approximately US$1 million per day. American anticipates reducing its debt by more than US$15 billion by December 2025 compared to previous guidance of US$8 billion to US$10 billion and plans to achieve this objective through naturally occurring amortization, use of excess cash and free cash flow to pay down prepayable debt, and by potentially using cash as opposed to debt for certain future aircraft deliveries.

American is prepaying the entirety of its US$950 million spare parts term loan that was scheduled to mature in April 2023 as evidence of its commitment to deliver and its confidence in the future. The Company will continue to match its forward capacity with observed bookings trends. Based on current trends, it expects third-quarter capacity to be down approximately 15% to 20% compared to the third quarter of 2019. American expects its third-quarter total revenue to be down approximately 20% compared to the third quarter of 2019 and that its third-quarter pre-tax margin excluding net special items will be between negative 3% and negative 7%.

Email Post to a Friend Email Post to a Friend