American Airlines running into turbulent times
On a global scale there is no airline that hasn’t been affected by the wrath of coronavirus. American Airlines have been one of the worst affected airlines in the states alongside United and Delta. American Airlines shares have been given a blow. Since February 21st the shares of American Airlines have been down by 44%.
What is affecting American Airlines ?
During the non peak seasons of travel, American Airlines relies on corporate travel but corporate travel has also been hit as companies are advising employees to avoid non-essential travel. The past year has also seen its fleet of 24 B737-8MAX grounded.It has also been hit hard with restrictions to travel to Europe from America which was announced earlier in the day. Through its routes over Atlantic it had a $4.6 billion in revenue which makes up about 11% of its total revenue.
Adding to restrictions on european travel there is almost no demand for its Pacific sectors due to travel bans placed and could pose a challenge for the survival of the company. It also has a debt of $34 billion now.
American Airlines had already announced reducing its routes due to the decrease in demand and had also suspended service to Hong Kong, and China through the summer and suspended service to Seoul Incheon, Tokyo-Narita and Tokyo Haneda until early of May. It had also reduced domestic capacity by 7.5% due to lower demand.On a recent note from the company it had also stopped hiring of pilots due to sharp drop in travel demand. For an airline with about 945 aircrafts serving around 350 destinations and home to around 1,28,900 employees there cannot be a greater challenge than the one the company is facing now.