DALLAS (AP) – How bad was 2020 for the aviation sector? The six largest airlines in the United States lost $ 34 billion, and Southwest suffered its first loss in the entire year since Richard Nixon was president and gasoline was sold for 36 cents a gallon.
It was a disaster for airlines, worse than 9/11 or the global financial crisis – some very small operators did not survive it – and the new year started out bleak.
On Thursday, Southwest, American and JetBlue reported that they lost $ 3.5 billion in the last three months of the year. All issued bleak revenue prospects for the current quarter that echoed the similar pessimism of Delta, United and Alaska, which previously reported financial results.
Airlines are looking at last spring and hoping that as more people get vaccinated against COVID-19, airlines will be able to save something from the peak of the summer vacation season.
But even this cautious optimism is under threat. Yes, the number of new reported cases of coronavirus in the United States has declined in recent weeks, but remains high. And now, the interruption of vaccine launches threatens to further delay the recovery in the travel and travel industry.
President Joe Biden reinstated COVID-19 travel restrictions this week for most non-American travelers from Brazil, the UK and South Africa. There is also a new requirement from the US that non-citizens provide proof of a negative test to COVID-19 before boarding a flight to the United States.
On Thursday, as airlines released the results, a new variant of the coronavirus identified in South Africa was found in the United States for the first time, with two cases diagnosed in South Carolina.
“International travel restrictions have resulted in reduced demand,” said American Airlines CEO Doug Parker. “We saw this especially on short-haul international travel, things like Mexico and the Caribbean.”
Airlines support testing international travelers, seeing this as a way to eliminate other border barriers and quarantine requirements. However, they are totally against testing travelers within the United States, considering it expensive and impractical.
A senior official at the United States Centers for Disease Control and Prevention said this week that the health agency is “actively seeking” to test passengers before boarding domestic flights.
Southwest CEO Gary Kelly argued that the United States has limited testing capacity and should focus its virus control efforts on vaccinating people more quickly.
“Why choose air travel?” Kelly said. “If you want to test people, test them – but test them before they go to the supermarket, test them before going to a restaurant.”
As travel is likely to remain weak for several more months, airlines continue to cut costs and encourage workers to leave. Federal aid avoided more licenses, at least until March. Low-income airlines have accumulated tens of billions of dollars from private creditors and taxpayer-funded aid to help them overcome the pandemic.
The focus now is on the cash burn rate, a balancing act that is essential to tackling the global pandemic. American said it would lose $ 30 million a day in the first quarter. Southwest expects to burn $ 10 million to $ 15 million a day.
Wall Street analysts expect airlines to lose money again this year, although not as much, according to data compiled by FactSet.
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AMERICAN AIRLINES
American Airlines Group Inc. posted a loss of $ 2.2 billion in the fourth quarter and $ 8.9 billion for the entire year 2020, after earning nearly $ 1.7 billion the previous year.
Fourth-quarter revenue fell more than 64% to $ 4.03 billion, and the airline based in Fort Worth, Texas, predicted a similar trend for the first quarter of 2021 – expects revenue to lag behind the year’s figures 60% to 65%.
American expects to burn about $ 30 million a day in the first quarter, almost the same rate as in the fourth quarter.
American shares were up 31% before closing with a 9% rise. Analysts say American is now stuck in volatile trades that have seen other stocks, notably GameStop, engage in a battle between small investors and short sellers. Parker declined to discuss the situation or say whether American will issue new shares while the share price is high.
The fourth quarter loss was $ 3.86 per share, after removing special earnings. Analysts had expected a loss of $ 3.92 per share, according to a survey by Zacks Investment Research.
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SOUTHWEST AIRLINES
Southwest recorded a loss of $ 908 million in the fourth quarter, compared with a profit of $ 514 million in the previous year, and said reserves have stopped due to the high number of new reported cases of COVID-19.
The Dallas airline predicted that January revenue will drop 65% to 70% compared to the same month last year, and February revenue will fall 65% to 75%.
Kelly said that the availability of the vaccine “should mark the beginning of the end of this pandemic”, even if current passenger reservations do not show it.
Southwest’s adjusted loss of $ 1.29 per share was less than Wall Street expected. Analysts at the Zacks survey predicted $ 1.69 per share.
Revenue fell 65% to $ 2.01 billion.
Southwest shares gained 1%.
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JETBLUE AIRWAYS
JetBlue reported a loss of $ 381 million after reporting a profit in the fourth quarter of 2019. The New York-based airline said its adjusted loss was $ 1.53 per share, compared to the anticipated average loss of US $ 1.72 per share in the Zacks survey.
In the year, JetBlue lost $ 1.36 billion.
JetBlue’s stock remained almost unchanged.
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David Koenig can be contacted at www.twitter.com/airlinewriter
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