American Airlines Reports Pretax Loss of $4.3 Billion In 2Q

Travel restrictions took a toll on American Airlines’ (AAL) 2Q operations. The company lost $7.82 per share in 2Q, higher than analysts’ expectations of $7.70. Moreover, it compared unfavorably to the earnings of $1.82 per share in the year-ago period.

American Airlines’ quarterly revenues plunged 86.4% year-over-year to $1.62 billion but came ahead of analysts’ estimates of $1.44 billion. The significant drop in its revenues reflects a decline in passenger volumes due to travel restrictions imposed by governments across the world to contain coronavirus. Capacity fell by 78.4% year-over-year during the quarter.

American Airlines Chairman and CEO Doug Parker said, “this was one of the most challenging quarters in American’s history.” He further added, “COVID-19 and the resulting shutdown of the U.S. economy have caused severe disruptions to global demand for air travel.

To remain afloat, American Airlines plans to reduce operating and capital expenditure by $15 billion in 2020. Further, it raised $3.6 billion to boost liquidity.

Overall, the Street has a pessimistic outlook on AAL. Based on 3 Buys, 2 Holds, and 7 Sell, the analyst consensus rates AAL a Moderate Sell. Given the steep decline in its stock, the average price target of $13.88 implies a potential upside of 17.9%. (See AAL stock analysis on TipRanks).

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Amit Singh
Amit Singh has over eight years of strong experience (both sell-side and buy-side) in analyzing financial reports and filings as well as identifying strategic investment opportunities. Over the years, Amit has covered various industries and geographies, with a primary focus on consumer staples and the consumer discretionary sector. Amit’s background spans evaluating company portfolios, building complex financial models, writing financial articles, and identifying the overall financial worth of companies. He has a post-graduate diploma in finance.

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