FILE PHOTO: An American Airlines Boeing 737 jet sits at a gate at Washington’s Reagan National airport with the U.S. Capitol building in the background. U.S. April 29, 2020. REUTERS/Kevin Lamarque/File Photo
(Reuters) – American Airlines Group Inc (AAL.O) said on Friday it expects to halt its daily cash burn by the end of 2020 thanks to cost-cutting measures and an improvement in travel demand, easing concerns about its short-term liquidity.
American’s stock, which had underperformed peers among concerns about the company’s heavy debt load, rose 18% to $17.06 in early trading on the Nasdaq.
Among the other large U.S. carriers, Delta Air Lines (DAL.N) has also said that it expects its daily cash burn rate to reach zero by the end of the year.
U.S. airlines were collectively bleeding about $10 billion a month as the coronavirus pandemic prompted more passengers to cancel their flights and seek refunds rather than book new travel.
“The company has recently experienced improving demand conditions and has passed the peak in cash refund activity,” American Airlines said in a filing with the U.S. Securities and Exchange Commission.
However, as the duration and severity of the COVID-19 pandemic remain uncertain, the company said it expects its fiscal 2020 results to be materially impacted, the . (bit.ly/3cXRVp3)
American joined Delta in saying it expects its revenues to be 90% lower in the second quarter than a year ago.
Reporting by Sanjana Shivdas in Bengaluru and Tracy Rucinski in Chicago; Editing by Krishna Chandra Eluri, Amy Caren Daniel and Jonathan Oatis