BY TRACY RUCINSKI AND ANKIT AJMERA/Reuters
Top U.S. airlines and Air Canada <AC.TO> on Tuesday reported slower ticket cancellations and an improvement in bookings on some routes, sending their shares higher, though executives warned that rebuilding demand to pre-pandemic levels would be tough.
Speaking at an industry conference held virtually, Delta Air Lines Inc <DAL.N> CFO Paul Jacobson said it could be three years before the sector sees some sense of “normalized demand” and questioned whether people would have an appetite for flying full planes before there is a COVID-19 vaccine.
Delta is restoring around 100 flights to its schedule in June, which will help slow its daily cash burn to about $40 million by the end of the month and reach cash flow break-even by the end of the year, he said.
Jacobson said he expected that any necessary headcount changes at Delta could be done through voluntary programs.
American Airlines Group Inc <AAL.O> CFO Derek Kerr told the conference his company would need to “right-size” to ensure operations are cash-flow positive next year, noting that all excess cash would be used to pay off debt for the next five years. American, which has invested heavily in renovating its fleet, has the highest debt load of the U.S. majors.
Air Canada CFO Mike Rousseau said he could not predict when his airline’s cash burn would go to zero, noting it will depend on revenue performance in the coming months.
Separately, Southwest Airlines Co <LUV.N> said its June capacity would be roughly half its schedule a year ago. That represents an improvement from a 60% to 70% reduction in May. It projected its daily cash burn rate will slow to the low-$20 million range in June.
United Airlines Holdings Inc <UAL.O>, with more international exposure, said in a statement that its June capacity would still be down by about 90% year-on-year, and 75% in July.
United, which is due to present at the Wolfe conference later on Tuesday, said its total adjusted capital expenditure for 2021 would be close to $2 billion versus around $4.5 billion this year, falling to below $500 million in 2022 when it does not expect to take delivery of any new aircraft. It is taking fully financed jet deliveries this year and next.