Southwest Airlines, American swing to loss amid spiking COVID-19 cases

Southwest CEO: 'We expect air travel demand to remain depressed until a vaccine or therapeutics are available'

American Airlines Group Inc. and Southwest Airlines Co. posted losses for the second quarter after improvements in passenger traffic stalled in July as some states in the U.S. saw a resurgence in Covid-19 cases.

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"We expect air travel demand to remain depressed until a vaccine or therapeutics are available to combat the infection and spread of Covid-19," Southwest CEO Gary Kelly said Thursday.

The companies pointed to a rise in demand in May and June from the troughs of March and April. Southwest said bookings softened and trip cancellations increased in July.

American said it expects third-quarter system capacity to fall about 60% from the year-ago period, and Southwest said it is re-evaluating its August and September capacity plans.

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American posted a net loss of $2.07 billion, compared with a profit of $662 million in the comparable quarter last year. Southwest, the largest U.S. domestic carrier, recorded a net loss of $915 million, compared with a profit of $741 million a year earlier.

American's revenue plunged 86.4% to $1.62 billion, while Southwest's revenue fell 82.9% to $1 billion for the quarter ended June 30.

American said it burned about $55 million a day for the second quarter, down from nearly $100 million in April.

Southwest has burned about $18 million a day on average in July, according to its estimates. It has trimmed its average core cash burn to $23 million a day for the second quarter from about $30 million a day in April, primarily due to improving revenue.

Airlines are trying to stockpile cash to weather a crisis that they have said will likely last years. The $25 billion allocated to U.S. airlines under the $2.2 trillion stimulus package passed in March is set to expire at the end of September.

With the aid, carriers have agreed not to lay off or furlough workers until Oct. 1. But some, including American and United Airlines Holdings Inc., have already outlined plans that could result in thousands of workers being furloughed.

American said more than 41,000 employees have opted for an early retirement, a reduced work schedule or a partially paid leave, while more than a quarter of Southwest's workforce have volunteered for extended time off and separation programs.