American Airlines posts record $8.9 billion annual loss as it looks to 2021 for ‘year of recovery’

American Airlines lost $8.9 billion during 2020 when COVID-19 pushed the air travel industry to desperation, including $2.2 billion to finish the final quarter of the year with challenges ahead as demand continues to be weak.

After losing nearly $100 million a day in April, Philadelphia’s largest carrier managed to cut its losses to just $30 million in the fourth quarter, often through drastically reducing schedules, government aid, and employee leave.

While 2021 is off to a sluggish start even for the coronavirus era, CEO Doug Parker is hoping to strike an optimistic tone as the company tries to push through the next few months until a COVID-19 vaccine gets to enough people that travel feels safe again.

“As we look to the year ahead, 2021 will be a year of recovery,” Parker said in a statement. “While we don’t know exactly when passenger demand will return, as vaccine distribution takes hold and travel restrictions are lifted, we will be ready.”

Southwest Airlines, PHL’s second largest carrier, reported a $3.1 billion loss for 2020, the first annual loss for the company in 48 years.

Gary Kelly, CEO of the Dallas-based carrier, said Southwest is still losing $17 million a day and that revenue will need to double from current levels to hit break-even.

“While we hope to achieve cash burn break even in 2021, it is wholly dependent upon a substantial rebound in passenger traffic and revenue, and it is difficult to predict the timing of such a rebound, especially with respect to business travel,” Kelly said in a statement.

But even American’s massive $9.1 billion loss isn’t the biggest in the industry. Atlanta-based Delta Air Lines was $12.9 billion in the red in 2020, going from the most profitable to the least profitable carrier in just a year. Chicago based United lost $7.1 billion last year.

American’s 2020 loss makes even previous disasters and recessions look small. The company lost $6.5 billion over three years between 2001 and 2003, a period that combined the struggle of the 2001 terrorist attacks with financial problems at the company. American lost $9.7 billion between 2008 and 2013, which culminated in bankruptcy and a merger with US Airways.

But after bankruptcy and the merger, American rode a wave of six straight profitable years that resulted in $17.7 billion in earnings.

Parker famously proclaimed in 2017 that the company would never lose money again, and his prediction remained true even if American struggled to land planes on time and was near the bottom of the rankings in areas such as mishandled bags and customer complaints.

But even record-high profits couldn’t prepare American Airlines for 2020 and the COVID-19 pandemic, which swept through the country and the world swiftly in March and stifled an air travel recovery for the rest of the year.

American’s revenue was down 62% for 2020. Planes were 65% full on average and the number of passengers dropped to 65 million, from more than 155 million a year before. International traffic dropped by 76.5% for the year with little recovery, as total passenger miles for international was down 81.7% in the fourth quarter.

Still, after raising about $13 billion in debt and equity in 2020, the company finished the year with $14 billion to carry through the next few challenging months.

“Last year marked one of American’s most challenging years in our 95-year history,” Parker and American Airlines President Robert Isom said in a letter to employees Thursday. “We don’t know exactly when demand will fully return, but we know that when it does, American will be ready — and we’ll be even better positioned to succeed than we were prior to the pandemic.”