American Airlines May Seek More Money From U.S. Treasury

American Airlines might seek more money from the Treasury Department to boost its ailing finances.
Author:
Publish date:

American Airlines  (AAL) - Get Report shares fell Wednesday, after the carrier said it might seek more money from the Treasury Department to boost its ailing finances.

American, like other major airlines and the entire travel industry, has been hammered by the coronavirus pandemic, which has kept travelers at home. 

The Dallas carrier has a major debt burden, analysts say. Its debt registered $40 billion in the second quarter, up from $33 billion in 2019, according to Morningstar.

The company is considering asking the Treasury for a larger loan, as some carriers may not use their portions of the $25 billion government bailout for the industry, American Chief Financial Officer Derek Kerr said at a Cowen conference Wednesday. Southwest Air  (LUV) - Get Report has already said it’s not taking a loan.

He also said American is negotiating with Boeing  (BA) - Get Report to delay the delivery of 18 Boeing 737 MAX jets. The MAX fleet has been grounded since March 2019 because of safety problems.

Delaying delivery of the jets, which are slated to be shipped in 2021 and 2022, would also delay American’s payment for them, Bloomberg reports

American has seen “some gradual improvement in demand” from its pandemic nadir, American President Robert Isom, said at the conference, as quoted by Bloomberg. But whether that rebound will continue is as yet unclear, he said.

American said last month that it would furlough 17,500 union workers in October. 

That reduction comes in addition to 1,500 administrative and support workers laid off in August but continuing to be paid through Oct. 1. 

That’s when the government’s payroll-protection aid to the airline industry ends.

American shares recently traded at $12.91, down 5.3%. They have dropped 55% year to date.