AAL Q2 2020 Earnings

Call Details

• Call Title: American Airlines Q2 2020 Earnings Call
• Date: July 23, 2020 at 4:00 AM UTC
• Management Team:
  • Doug Parker (Chief Executive Officer)
  • Derek Kerr (Chief Financial Officer)
  • Robert Isom (President)
  • Basir Raja (Chief Revenue Officer)
  • Dan Cravens (Head of Investor Relations)
  • David Seymour (Chief Operating Officer)

Call Summary

Financial Performance

• GAAP net loss for Q2 2020 was $2.1B, or $4.82 per share.
• The company recognized $1.7B of pre-tax net special items in Q2, primarily a $2.0B Payroll Support Program (PSP) related credit.
• Excluding net special items, the reported non-GAAP net loss was $3.4B, or $7.82 per share.
• Average daily cash burn in Q2 was approximately $55M per day, which improved from about $100M per day in April to $56M per day in May and $30M per day in June.
• Quarter-end available liquidity was $10.2B, and the company reported raising net $3.6B of incremental liquidity during the quarter.
• The company noted it was down materially on passenger demand with system load factors of 15% in April, 45% in May, and 64% in June.

Guidance

• The company expects third quarter system capacity to be down approximately 60% year over year.
• Third quarter end available liquidity is expected to be approximately $13B, assuming no additional financing beyond announced items.
• A signed term sheet for a $4.75B secured CARES Act loan is expected to close in Q3.
• Two senior secured note transactions totaling $1.2B with Goldman Sachs Merchant Bank are expected to close in Q3, which would create a pro forma liquidity balance of approximately $16.2B when combined with the $10.2B quarter-end balance.
• The firm reiterated a goal to be cash positive in 2021, subject to the pace of demand recovery.
• The company expects Q3 burn rates to be well below Q2 levels and Q4 burn rates to be lower than Q3 levels, with the timing dependent on demand.