American Airlines cuts more debt, sees highest revenues ever in Q2

By Devika Patel

Knoxville, Tenn., July 22 – American Airlines Group Inc. said it saw record revenues last quarter, and management continued to prioritize debt reduction, paying off $750 million of unsecured senior notes maturing in June and making $1 billion of debt and finance lease payments.

The company has completed one third of its plan to reduce total debt by $15 billion before 2026, having paid down $5.2 billion of debt since the second quarter of last year.

“During the quarter, we made $1 billion in scheduled debt and finance lease payments, including paying off the remaining outstanding balance of our $750 million unsecured senior notes that matured in June,” vice chairman, president of American Eagle and chief financial officer Derek Kerr said on the company’s second quarter ended June 30 earnings conference call on Thursday.

“Total debt reduction remains a top priority.

“We remain on track with our target of reducing overall debt levels by $15 billion by the end of 2025.”

“To date, we have reduced overall debt levels by $5.2 billion from peak levels in the second quarter of 2021.”

Kerr said the debt reductions to date give the company flexibility as to when and how to pay down the remaining $10 billion in total debt by the end of 2025.

Liquidity is high, but once the recovery is certain, the company plans to reduce liquidity to $10 billion to $12 billion, with any excess liquidity used to reduce debt.

“In the near term, we will continue to keep our liquidity at elevated levels, with a plan to step down to $10 billion to $12 billion when we are confident the recovery has fully taken hold,” Kerr said.

“At that time, any excess liquidity will be prioritized to reduce debt,” he said.

The company produced record revenues in the last quarter of $13.4 billion.

“American produced revenues of $13.4 billion in the second quarter and that’s an increase of 12.2% versus 2019 and a record for any quarter in the company’s history, and let me repeat that, that’s a record for any quarter in our company’s history,” chief executive officer Robert Isom said on the call.

“These results were achieved while flying 8.5% less capacity than we did in 2019,” Isom said.

The company was profitable in the second quarter due to record revenues, and management expects American will remain profitable in the third quarter despite rising fuel costs.

“We talk a lot about our goal of returning the airline to profitability, and our second-quarter performance is a result of that focus,” Kerr said.

“In the third quarter, we expect to be profitable despite the continuation of elevated fuel prices,” Kerr said.

Cash was $401 million as of June 30, 2022, compared to $273 million as of Dec. 31, 2021.

Long-term debt and finance leases, net of current maturities, were $34,963,000,000 as of June 30, 2022, compared to $35,571,000,000 as of Dec. 31, 2021.

Current maturities of long-term debt and finance leases were $2,106,000,000 as of June 30, 2022, compared to $2,489,000,000 as of Dec. 31, 2021.

American Airlines is a Fort Worth-based airline.

© 2015 Prospect News.
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