American Regional Subsidiary PSA Grounds All Flights
PSA Airlines, a wholly owned subsidiary of American that flies as American Eagle, grounded itself on Thursday afternoon to complete a necessary, standard inspection on the nose gear door of most of PSA’s aircraft that it somehow missed. PSA currently operates a fleet of 130 aircraft, split between 69 CRJ-900s, and 61 CRJ-700s.
The issue as explained to Cranky is that certain bolts on the nose-gear door need to be re-torqued every so often, and it was discovered that work had not been completed as required. The grounding did not come as a result of an incident in the air or on the ground, and it doesn’t appear passengers were in any danger.
Due to the grounding of the fleet, American has been forced to cancel more than 200 flights with that number expected to grow. The airline is accommodating passengers as best it can, but will find some difficulty as PSA operates flights to 91 airports on behalf of American, many of them where PSA is the only operator.
Thousands of AA passengers have been affected, but on the bright side, most of them doesn’t even realize it. By choosing to fly American, they all resigned themselves to the fact they’d be sitting at the gate for hours waiting for boarding to be called, so at this point, nothing seems out of the ordinary.
American Closes Up 2020 with Year-End Financials
On a busy day for airline financials, American Airlines released its year-end earnings report for 2020. The airline saw a $2.2 billion loss for Q4, ending the tumultuous year $9.5 billion in the red. The loss would have been much higher had it not been for airline’s foresight to go onto Antiques Roadshow and have appraisals run for items found in passengers’ luggage that the airline lost and was never claimed.
AA reduced its daily cash burn from $100 million at the onset of the pandemic down to about $30 million in the fourth quarter. The airline secured $9 billion from the federal government through both PSP offerings. It also has drawn $550 million of a potential $7.5 billion from the federal government through the CARES Act loan program, putting up millions in gift cards to each Chili’s To Go location at Dallas/Ft. Worth as collateral.
In a note to employees from CEO Doug Parker and COO Robert Isom, the pair said that AA ended the year with $14 billion in available liquidity. The airline welcomed its furloughed employees back on December 24 and is hopeful that by the time this round of PSP funding goes away, it will have seen enough demand return to keep most of them – if not all – still employed. And if not, they can be loaned out to subsidiary PSA Airlines to help oversee the torquing program on each of PSA’s nose-gear doors.
Southwest Chimes In to DOT on Northeast Alliance
Southwest Airlines filed an addition to its previous letter to the DOT with regards to the Northeast Alliance between JetBlue and American. The government gave its go-ahead to the alliance earlier this week despite objections from several airlines including Spirit, Southwest, and United.
In this letter, Southwest’s says JetBlue needs to pick one or the other – it’s an independent LCC, or it’s a partner of AA’s but it can’t be both. By having permission to coordinate on scheduling and price, JetBlue is able to tap into AA’s traditional hub-and-spoke model, connect passengers, and split revenue, making the airline an extension of AA and no longer a spunky, upstart LCC in the Northeast.
JetBlue –according to Southwest — wants to have its cake and eat it too. Southwest says JetBlue received 90% of its slots at Washington/National, and 50% of its slots at New York/LaGuardia due to government disbursement of the slots to LCCs in previous years. By joining forces with American, Southwest believes JetBlue is no longer entitled to the access. Either you use the slots at slot-controlled northeastern airports given because you’re an LCC, or you’re tied into American and its legacy airline advantages but not both.
JetBlue is willing to divest itself of slots in the northeast, especially at what it calls some of its most strategic airports: Albany, Portland, ME, Stewart/Newburgh, and Worcester, but this doesn’t seem to be enough to satisfy Southwest.
Southwest Posts Q4 Earnings
Southwest Airlines posted its earnings report for the 4th quarter of 2020 and for the full year, showing a loss for Q4 — but a loss that was less than expected. Southwest lost $908 million during 2020’s final quarter, finishing the year down $3.1 billion. Revenue in Q4 was just over $2 billion, a 69% drop from Q4 2019. The airline operated 40% less capacity in Q4 2020 than it did a year ago, with a load factor of 53.8% after posting a load factor of 83.1% in 2019.
Southwest’s cash burn dropped to just $12 million in Q4, its best by far since the start of the pandemic, but it does expect that figure to rise to as high as $17 million during Q1 2021. The Q1 number is worse due to January always being a softer booking month, combined with another slow down in travel as COVID-19 continues to rage. Southwest remains encouraged that it will begin to bounce back this summer as it introduces several new routes and destinations that people actually want to visit… plus Jackson, MS.
Southwest closed 2020 with $14.3 billion of liquidity, $12 billion in unencumbered assets, and approximately 13 billion honey-roasted peanuts it has never been able to get rid of once it stopped serving them onboard.
JetBlue’s Fourth Quarter Results Are In
JetBlue, the airline that willingly reminds you of NYC subway stations while using the restroom in its A220 fleet, completed the airline financials trifecta by announcing its Q4 results today. The loss — $454 million for the quarter — comes one year after posting a $227 million profit in Q4 of 2019. For the year-ending 2020, JetBlue posted a total loss of $1.7 billion, a 314% drop from 2019’s profit of $800 million.
The airline ended 2020 with $3.1 billion in unrestricted cash, which represents 38% of its 2019 revenue. JetBlue paid $100 million in regularly scheduled debt and lease obligations during Q4, and also spent $1,100 to supply employees at headquarters with free Dunkin’ Donuts coffee for the month of December.
Q4 traffic for JetBlue dropped 62.2% from 2019. It flew a load factor of 52.4%, down from 82.9% a year ago. JetBlue’s cash burn for Q4 was $6.7 million per day, and this will be the final cash burn reported by the company. Moving forward, it plans to report daily EBITDA in order to make accountants and economists feel better about themselves because they are the only ones who actually know what EBITDA is.
Airline Potpourri
- El Al, in an effort to remind us they still exist, completed a slot swap with Wizz Air, picking up four slots at London/Luton for this summer.
- Emirates is adding 12 months of status before expiration for all elite members.
- FedEx is relocating all of its Hong Kong-based pilots to San Francisco to avoid quarantine.
- Malaysia is revamping its frequent flier program, with points now being earned based on spend, not distance flown.
- Qatar is extending elite status for all current elite members through December 31.
- Spice Jet has been formally granted permission by the DOT to operate between India and the United States.
- Southwest is adding four new routes to its network. Miami to Atlanta (twice-daily) and Dallas/Love (once-daily). Sarasota to Atlanta (once-daily) and Maui to Long Beach (once-daily). All four routes begin March 11.
Andrew’s Moment of Levity
I was eliminated from a spelling bee today when I misspelled Armageddon. I knew I’d be upset if I lost, but I didn’t realize losing would be the end of the world.