Southwest Airlines and American Airlines on Thursday reported deep losses in the second quarter of the year, as a meek rebound in travel slowed in recent weeks with the spread of coronavirus infections and travel restrictions nationwide.
For Southwest, revenue declined 83 percent from the same quarter last year, resulting in an overall loss of $915 million. American saw revenue fall 86 percent, giving way to a $2 billion loss. The losses represent a reversal of fortune for both airlines, which earned hundreds of millions of dollars in profit during the same three months in 2019.
“The current environment is more unpredictable and more volatile than anything we ever could have imagined,” American’s chief executive, Doug Parker, said in an email to staff on Thursday.
Demand for flying will probably “remain depressed” until a vaccine or treatment for the virus is developed, said Southwest’s chief executive, Gary Kelly, echoing his counterpart at United Airlines.
The quarterly results are in line with their industry peers: Revenue fell 88 percent for United and 87 percent for Delta Air Lines. United suffered a $1.6 billion loss, down from a $1 billion profit last year. Delta lost $5.7 billion, down from a $1.4 billion profit in 2019.
The second quarter is likely to be the worst of the pandemic for the industry, which was blindsided by a more than 90 percent decline in passenger traffic in March. Air travel remained below that level through April. Airlines started to claw their way back in May and June, but the recovery has since stagnated as coronavirus infections spread across the country. The number of people screened at federal airport checkpoints remains about 75 percent below last year’s levels.
A federal stimulus in March delivered emergency funding, which protected jobs through September, but every major airline has warned of deep cuts to come. American has warned that it could furlough as many as 20,000 employees this fall, while United has warned that it could furlough up to 36,000. Delta has said similar cuts may follow, though it is working to avoid them, while Southwest said on Thursday that it did not plan to furlough or lay off employees — or cut pay or benefits — through the end of the year.
Airlines are shoring up emergency reserves for what is expected to be a long, choppy recovery. American said it ended the quarter with more than $10 billion in cash on hand, not including a $4.75 billion Treasury Department loan it expects to take and another $1.2 billion it raised on Thursday. Southwest said it had about $14.5 billion, while United and Delta each have more than $15 billion on hand.
American averaged daily losses of $55 million in the second quarter, compared with $43 million for Delta, $40 million for United and $23 million for Southwest.