The American Airlines Group Inc. (AAL) and United Airlines Holdings Inc. (UAL) said that they had contained costs and reported a positive cash flow in March.
Due to the suspension of thousands of flights worldwide over the COVID-19 pandemic, the past year has been extremely difficult for the airline industry in general. As a result of mass vaccinations, the demand for air travel has slightly increased. While still far below the dock level, it is already a noticeable improvement compared to the start of 2021—62% fewer passengers registered for flights in the first days of February than the previous year. By April 2021, this figure had already dropped by 39 % from the same time last year. As vaccinated Americans begin planning summer travel, bookings are predicted to rise even more.
A recent announcement by American Airlines indicates that cash expenditures on the airline average just $ 4 million per day in March. Nevertheless, the estimated average daily cash expenditure for the first quarter of 2021 is $ 27 million. March saw an average of $ 8 million in cash payments on layoffs and debt repayments. Last month except for these items, the AAL stock’s cash flow was positive.
U.S. airlines said March saw the AAL stock’s core cash flow turn positive because of increased bookings. United Airlines managed to control fixed cash burn throughout the quarter at $9 million on an average per day. Despite this, results were solid considering the COVID-19 issue.
Although positive cash flow has gradually recovered, it remains unclear if it is a steady profitability sign. The airlines took on additional debt during the pandemic, which is now due to be repaid. Companies will likely return less to shareholders due to the increase in debt obligations. It is also worth noting that low-cost airlines, which are expected to become more popular after the pandemic, will have to compete with major airlines such as United Airlines and American Airlines.
The shares of American Airlines Group Inc (AAL) closed after-market at $22.1, down -0.14%. Last session, AAL’s stock closed at $22.13, decreasing 1.07% or $0.24. Shares fluctuated between $21.695 and $22.6669 throughout the day. There were 34.23 million shares exchanged, down from its 50-day daily volume of 43.82 million. The book since the beginning of the year was 52.45 million. The AAL stock’s stocks have advanced 80.07% in the past 12 months and have slipped -6.43% in the last week. Over the past three months, the stock has returned 42.5%, and over the past six months, it has returned 81.10%. It has ended this year with a total return of 40.33%.