American, Southwest post record annual losses as recovery remains elusive

American Airlines on Thursday reported a record quarterly loss and faces difficult months ahead as new travel restrictions and a slow rollout of vaccines cloud hopes for a near-term recovery.

American posted a net loss of $2.2 billion in the fourth quarter. Revenues tumbled more than 64% to $4.03 billion, compared with $11.3 billion a year earlier. Sales were above analysts’ forecasts for $3.88 billion for the quarter. Shares were up 30% in premarket trading amidst the frenzy of retail buying of stocks with large short interests. American has much more short interest in its shares than other U.S. carriers.

The airline said it expects capacity in the first quarter of 2021 to be down 45% compared with 2019, before the coronavirus pandemic sapped travel demand. It expects revenues to be off 60% to 65% lower for the first quarter compared with the same months of 2019.

Here’s how American performed in the fourth quarter, compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

• Adjusted EPS: a loss of $3.86 versus an expected loss of $4.11.
• Revenue: $4.03 billion versus expected $3.88 billion in revenue.

Earlier Thursday, Southwest Airlines reported its first annual loss since 1972 and said it would remain conservative with capacity through March citing weak demand.

Southwest expects average core cash burn of about $17 million a day in the first quarter “as a result of continued softness in demand and a seasonally weaker travel period in January and February 2021, as well as rising fuel prices.” That’s up from the $12 million a day in in the last three months of 2020.

It forecast January revenue will be down 65% to 70% compared with 2019, slightly better than a decline of as much as 75% it previously forecast after cancellations stabilized. Southwest said February revenues will likely fall 65% to 75% compared with the same month of 2019.

Its share price was up 3% in Thursday’s premarket.