In a new SEC filing, American Airlines Group (NASDAQ:AAL) said it expects second-quarter revenue down 90% versus the year ago period. This is in line with what competitor Delta Air Lines (NYSE:DAL) said this week. American also said that its cash burn rate has decelerated from the $100 million per day it saw in April, to about $40 million per day it expects at the end of June. This would be ahead of its previous forecast, and American said it expects cash burn to be near zero by the end of 2020.
The company's outlook is predicated on improving demand conditions as well as cost reduction initiatives. As net bookings decreased through April, the airline reduced its capacity to better match demand. Recently, however, it said it is adding back capacity, and expects to be at 55% domestic capacity in July compared to last year, and overall systemwide capacity of about 40%, including international. This is an improvement compared to approximately 20% in May, and an expected 25% in June, 2020.
American feels that it has adequate liquidity, expecting to be at about $11 billion at the end of June, including federal aid from the CARES Act that it expects to receive this month.
The $4.75 billion loan is expected to have a five-year duration secured by its domestic AAdvantage Program, which has been appraised to have a value between $19.5 billion and $31.5 billion, the company said. As part of the loan agreement, the company expects to issue warrants to the U.S. Treasury for 38 million shares of common stock at an exercise price of $12.51 per share.