American Airlines' quarterly loss better than expected, shares jump 60%

By Tracy Rucinski and Sanjana Shivdas

(Reuters) - Shares in American Airlines Group Inc, the most shorted U.S. carrier, surged 60% in premarket trading after it was mentioned on Reddit's WallStreetBets forum and it posted a slimmer-than-expected quarterly loss on Thursday.

American joined rival Delta Air Lines in calling 2021 a year of recovery for an industry that has been ravaged by the coronavirus pandemic.

"As we look to the year ahead, 2021 will be a year of recovery. While we don't know exactly when passenger demand will return, as vaccine distribution takes hold and travel restrictions are lifted, we will be ready," American Airlines Chief Executive Doug Parker said.

American reported a net loss of $2.18 billion, or $3.81 per share, for the fourth quarter, compared with a profit of $414 million, or 95 cents per share, a year earlier.

On an adjusted basis, the company lost $3.86 per share. Analysts on average expected the company to lose $4.11 per share, according to Refinitiv data.

Total operating revenue fell to $4.03 billion from $11.31 billion but topped analysts' expectations of $3.88 billion.

The carrier reported an annual loss of $8.9 billion, its biggest on record.

"We believe the (stock) move is due to the de-risking going on in the market and American remains one of the most consensus short airlines in our coverage universe," Cowen analyst Helane Becker said.

"It's hard to say when the market will look at the company's fundamentals, but we believe American could take this opportunity to de-lever the balance sheet with an equity offering," she added.

Airlines are hoping that sentiment will improve this year as COVID-19 vaccines are more widely distributed. However, new strains of the virus have triggered tighter rules for international travel in countries including the United States.

American Airlines ended the fourth quarter with about $14.3 billion in available liquidity.

 

(Reporting by Sanjana Shivdas in Bengaluru and Tracy Rucinski in Palm Coast, Florida; Additional reporting by Shariq Khan; Editing by Maju Samuel, Steve Orlofsky and Nick Zieminski)