American Airlines CEO: No major US airline is likely to fail during coronavirus pandemic
American Airlines CEO Doug Parker does not believe that the coronavirus pandemic will force a major U.S. carrier out of business, arguing that the industry faces a demand crisis that it can weather with the assistance its receiving.
“I think we’re all going to be fine," he said at the Bernstein Strategic Decisions conference on Wednesday. "I think we’re all going to raise enough liquidity [cash] to get through this… I don’t think you’re going to see any airlines go by the wayside.”
While a major airline may not "go by the wayside," Parker does expect the U.S. industry to be 10% to 20% smaller next summer than it was in 2019 — effectively making it as if a large airline disappeared.
Parker's comments come just two weeks after Boeing CEO Dave Calhoun told the Today Show that a major carrier would “most likely” fail due to the crisis.
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In Parker's court are strong numbers — relatively speaking — coming out of Memorial Day weekend, the symbolic start of summer in the U.S. American reported that its planes were 56% full even as it flew just 20% of its planned schedule. That's a dramatic improvement from the roughly 15% of seats that it filled in April.
The Transportation Security Administration (TSA) saw an uptick in people screened over the holiday long weekend. The agency screened 348,673 people on Friday, May 22, at the outset of the weekend marking the highest total since March when people began staying home in large numbers because of COVID-19. Still, the May 22 total represented just over 12% of the number screened a year ago.
The uptick is good for airlines that are working to staunch losses that peaked at as much as $70 million a day. At the same time, however, they raise concerns among travelers over how to stay safe from COVID-19 while flying.
Related: A complete list of major carriers’ coronavirus change and cancellation policies
American is widely considered among the weaker financially of major U.S. carriers. Owing to a massive fleet renewal that saw it replace more than 200 McDonnell Douglas MD-80 and other older jets over the past decade, American has more debt than peers Delta Air Lines and United Airlines.
The airline has moved rapidly to cut costs, including retiring four aircraft types — Airbus A330-300s, Boeing 757 and 767s, and Embraer E190s — from its mainline fleet. American has put a fifth, its A330-200s, in long-term storage. In addition, it plans to cut its workforce by roughly 30% this year.
In a positive sign, a weekly forecast by analysts at Raymond James on May 25 indicated that American has roughly seven months of cash on hand — up from just six months a week ago — to weather the crisis. Delta had nearly 13 months of cash and United about 10 months.
Cash is viewed as critical to survival for airlines. Those that have filed for bankruptcy, including Avianca and LATAM Airlines, have cited the near total evaporation of revenue amid a fixed cost base as prompting their restructurings. The U.S. government has provided more than $50 billion in assistance to the country's airlines through its $2 trillion coronavirus aid package, known as the CARES Act.
Related: American Airlines ‘not going away’ because of the coronavirus crisis
"I don't think people shouldn’t think of bankruptcy as a financial tool, I think it's failure," said Parker, who is known for publicly stating strong positions, on Wednesday.
American reorganized in Chapter 11 bankruptcy from 2011 through 2013 when it merged with US Airways. Parker was CEO of US Airways prior to the merger.
As the airline recovers from COVID-19, it's the carrier's domestic map will lead the way. American's senior vice president of strategy Vasu Raja described the short-haul network as the "core strength" of the carrier.
Related: A country-by-country guide to coronavirus recovery
American's Dallas/Fort Worth (DFW) and Charlotte (CLT) hubs are already seeing increased flight levels, he said. In addition, they will continue to be its two largest bases into the future.
"Historically in downturns, the big hubs win," he said.
Raja did not comment on the future of some of American's other hubs, especially ones that were weaker pre-crisis. Los Angeles (LAX) is widely thought to be the carrier's weakest hub and one where it faces the most competition.
American plans to resume some limited international flying from Chicago O'Hare (ORD) and New York John F. Kennedy (JFK) in June. At the same time, it will suspend flights to four smaller domestic cities through September: Aspen (ASE), Montrose (MTJ), Vail (EGE) and Worcester (ORH).
Related: American Airlines has ‘no plans’ to close hubs when it shrinks post-coronavirus
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Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.