By Sanjana Shivdas and Ankit Ajmera
(Reuters) – U.S. carriers American Airlines and Southwest Airlines on Thursday signaled a slower cash burn and pointed to a rebound in summer bookings as accelerated COVID-19 vaccinations make more people confident about traveling again.
After nearly a year in the doldrums due to the pandemic and accompanying travel restrictions, airlines are seeing light at the end of the tunnel with over 50% of the U.S. population having received one dose of the vaccine.
“March was clearly a significant improvement over January and February and guidance is for continued improvement into the June quarter and the summer beyond it,” Cowen and Co analyst Helane Becker said.
“The airlines are turning their attention to paying down some of the debt they took on to get through the pandemic which is encouraging.”
Southwest forecast second-quarter average daily core cash burn between $2 million and $4 million, compared with about $13 million per day in the previous three months.
American, on the other hand, said average daily cash burn slowed to $4 million in March, while its overall average daily cash burn rate was about $27 million in the first quarter.
Southwest said it expects second-quarter capacity to rise about 90% from a year earlier, while American sees capacity to be down between 20% and 25% compared with 2019, slowing from a 35% fall in the first quarter.
Southwest shares were up 1%, while American Airlines stock was down marginally.
American has a bigger exposure to international travel, which is not expected to rebound in the summer as most borders remained closed, analysts have said.
“I know (the Biden administration) understands the importance of restoring international travel to the economy,” American Airlines Chief Executive Officer Doug Parker said.
“We all need to go look at this in a risk-based way. No one wants to rush for certain, and no one’s pushing that either.”
Meanwhile, operating revenue at both the companies fell more than 50%, but slowed from an about 65% fall in the fourth quarter.
(Reporting by Sanjana Shivdas and Ankit Ajmera in Bengaluru; Editing by Sriraj Kalluvila)
