Speaking Thursday on an investor call, CFO Derek Kerr said the carrier has cut costs as much as it can and is waiting for renewed demand to produce sufficient revenue for breakeven operation.
Asked when the carrier will break even, Kerr responded, “With demand coming back, cost structure where it is, adding cash back in, we can get there hopefully sometime in ‘21, and for sure in ‘22.”
“To get from $20 million to $30 million (daily loss) back to positive, it really is a demand recovery,” Kerr said, noting that the carrier had cut costs by about $1 billion annually due primarily to management reductions and retirement of about 150 aircraft.
A 30% management head count reduction was “much needed,” Kerr said. American merged with US Airways in 2013. “We’ve been merging these two airlines for the last seven years,” he said. “It was time to do that.”
The problem for airlines is that while a vaccine is on the horizon, demand for now is not high.
President Robert Isom said, “Right now people are only traveling to where things are open. I know that there’s pent up demand. (But) people will only travel to where things are open.”
In international, Isom said, “the only real demand is short haul, Mexico and the Caribbean, places we can get folks into. (But) when things are open, we know that travel will return.”
For now, American remains focused on southern U.S. tier hubs in Charlotte and Dallas. In the third quarter, Isom noted, one out of every three U.S. airline passengers flew on American. As a result, while U.S. airlines have cut back dramatically on flights, Charlotte and Dallas departure levels remain relatively high.
At Charlotte Douglas International Airport, where American reached a long sought year-round level of 700 daily departures in 2019, peak daily departures are at 471 this month and will reach 492 in December.
At Dallas Fort Worth International Airport, American daily peak departures are 628 this month, rising to 635 in December.
At midday Thursday, American shares were up about 1% to $12.17.