American Airlines Financial Trends Improving

American Air's cash-burn rate has eased to $40 million a day forecast for June from more than $100 million a day in April.
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American Airlines  (AAL) - Get Report shares advanced Friday after the carrier in a Securities and Exchange Commission filing reported improving business trends.

The Fort Worth, Texas, carrier has cut more than $13.5 billion from its operating and capital budgets for 2020. In addition, “the company has recently experienced improving demand conditions and has passed the peak in cash refund activity,” the nation’s biggest airline said in a statement.

“As a result, the company’s cash burn rate has decelerated from a peak of over $100 million per day in April to approximately $40 million per day [forecast for] June. This marks a $10 million per day improvement for the month of June when compared to the company’s previous forecast of $50 million per day.”

American hopes to slash its cash-burn rate to zero by the end of the year, “as expected demand conditions continue to improve and its cost initiatives continue to gain traction.”

Meanwhile, “since the first week of May, the company’s net bookings have been consistently positive and have shown continued signs of improvement,” the company said. Since the middle of May it has seen positive net bookings in each of the time periods that it regularly monitors.

Last week, American said it planned to hit more than 55% of its July 2019 domestic capacity next month. International capacity is expected to rise to 20% of last year's levels.

American Airlines shares recently traded at $16.27, up 13%. The stock dropped 12% in the three months through Thursday, compared with a 10% slide for the S&P 500.