American Airlines, Southwest post deep losses and renew calls for aid

CHICAGO: American Airlines and Southwest Airlines each reported deep losses in the third quarter on Thursday, but said they would burn less cash in the months to come as leisure bookings show signs of recovery from this year's coronavirus-driven collapse.

They warned, however, that passenger traffic would remain fragile until a COVID-19 vaccine was made widely available, and renewed calls for another $25 billion in government payroll support to protect jobs.

Southwest said it would stop blocking middle seats in December, referencing recent medical research about the coronavirus showing that the combination of air filtration on airplanes combined with face masks "make the risk of breathing COVID-19 particles on an airplane is virtually non-existent."

It said the practice of keeping middle seats open had bridged it from the early days of the pandemic, "when we had little knowledge about the behavior of the virus, to now."

American has already been selling all of its available seats.

American posted a net loss of $2.40 billion, or $4.71 per share, in the third quarter ended Sept. 30, compared with a profit of $425 million, or 96 cents per share, a year earlier. It was its third straight quarterly loss.

On an adjusted basis, the company lost $5.54 per share. Total operating revenue fell to $3.17 billion from $11.91 billion.

American said it expects its cash burn rate to fall to about $25 million to $30 million a day in the fourth quarter from about $44 million per day in the third quarter and $58 million per day in the second.

American Airlines ended the third quarter with $13.6 billion in available liquidity, after securing a total of $7.5 billion in federal loans.

"These funds will be critical as we continue to fight for the future of our company," American Chief Executive Doug Parker and President Robert Isom said in a memo to employees.

Southwest has not tapped the federal loan fund and ended the quarter with $15.6 billion in liquidity.

The low-cost airline forecast fourth-quarter average core cash burn of about $11 million per day, compared with $16 million per day in the third quarter and $23 million per day in the second.