American Airlines has ‘no plans’ to close hubs when it shrinks post-coronavirus

Apr 30, 2020

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American Airlines is promising to come back at all nine of its U.S. hubs even as executives admit that they do not have a full view of the impact the coronavirus pandemic will wreak on the airline business.

The promise comes as the Fort Worth, Texas-based carrier unveiled deep cuts to its schedule as it continues to grapple with the impact of COVID-19 during a quarterly earnings call on Thursday. American reported a $2.2 billion net loss in the first quarter — worse than even its $2.1 net loss in all of 2008 at the height of the Great Recession.

American will fly just 15% of its Miami (MIA) schedule, and and up to 15 departures a day from New York’s John F. Kennedy (JFK) and LaGuardia (LGA) airports in May. And in June, U.S. capacity will be down 70% year-over-year and international capacity 80%.

In addition, 10 international long-haul routes due to resume in May and June have been delayed by at least a month.

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“We have no plans to close any hubs, in fact far from it,” said Vasu Raja, senior vice-president of strategy at American, on the capacity cuts during the call. “The core of our customer proposition is to provide connectivity.”

When and by how much American restores its hubs remains to be seen. Its major connecting complexes at Charlotte (CLT) and Dallas/Fort Worth (DFW) remain in place through the summer, albeit with fewer flights than last year. Hubs at Chicago O’Hare (ORD), Philadelphia (PHL) and Phoenix (PHX) remain in place to a lesser degree depending on the day of week and where one is flying.

Coastal hubs in Los Angeles (LAX) and Washington Reagan National (DCA), as well as New York, have taken the largest short-term hits. American vice president of network planning Brian Znotins described them as “spoke-like” in a March interview.

“We’re just now starting a clean-sheet exercise of what 2021 will look like,” said Raja when asked for color on the restoration of American’s hubs.

Raja did not comment on whether Charlotte, Dallas/Fort Worth and Washington — previously American’s three “most profitable” hubs — would come back before others.

Related: American retires 80 Airbus, Boeing and Embraer jets due to coronavirus pandemic

 

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Few people are flying as COVID-19 continues to take its toll. The latest data from trade group Airlines for America (A4A) shows the average number of passengers on flights in the U.S. rose to 17 from fewer than 10 during the week ending April 28 — a positive sign but still a dismal spot for the industry.

The immediate issue facing airlines is how to cut costs to line up with near-zero demand. In addition to slashing capacity, carriers are parking jets and offering staff voluntary early retirement and unpaid leave packages to par their workforces. Southwest Airlines has delayed the deliveries of some 75 Boeing 737 MAX jets due in the next two years to some time in the future.

Still many continue to bleed cash even as they slash expenses. American hopes to reduce its daily cash burn to just $50 million a day by June from around $70 million currently.

“We all expect the recovery will be slow and demand for air travel will be suppressed for quite some time,” said American CEO Doug Parker on Thursday. “Difficult decisions lie ahead of all of us.”

Related: American delays Bangalore, Casablanca and many seasonal routes to 2021

Below is a list of the changes to American’s international route resumption plans:

Resuming on June 4, unless noted

  • Chicago O’Hare – Athens and Dublin on June 5, and London Heathrow (unchanged)
  • Dallas/Fort Worth – Amsterdam and Frankfurt (all unchanged)
  • Miami – Buenos Aires, Santiago and São Paulo (all previously due to resume on May 7)

Resuming on July 7, all previously due on June 4

  • Los Angeles – London Heathrow
  • Miami – Rio de Janeiro
  • New York JFK – Buenos Aires, London Heathrow and São Paulo
  • Philadelphia – London Heathrow
  • Raleigh/Durham – London Heathrow

Featured image courtesy of Philadelphia International Airport.

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