American Airlines: The first to go under liquidity crisis

American Airlines is in the midst of a liquidity crisis. Despite the weekly increase of air traffic, they are far away from the recovery of air travel, and it will take years before return to pre-COVID-19 levels. The consensus now is that the traffic will be down around 50% to 80% this year, and this leaves airlines in a dire situation. American Airlines’ latest earnings results for Q1 were just the beginning of what’s to come in Q2. While its revenues were down nearly 20% Y/Y from January to March, the decline rate of its revenues will be considerably worse from April to June.

Summary:

  • American Airlines burns $50 million to $70 million per day, and it will continue to lose money in the foreseeable future.
  • At the end of Q2, American Airlines expects to have $11 billion in liquidity, while its total debt is $25 billion.
  • Considering its enormous debt burden, there’s a very high chance that American Airlines will be one of the first major airlines to declare bankruptcy in recent years.

Read full article at https://seekingalpha.com/article/4349678-american-airlines-first-to-go-under 
Image source – https://images.wsj.net/im-191605?width=1280&size=1

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