American Airlines CEO Parker: ‘I don’t know’ when the industry will recover

The global coronavirus pandemic has grounded airlines to the point where industry titan American Airlines Group Inc (NYSE: AAL) has seen its revenue plummet by 90%. Yet despite a lifeline from the U.S. Treasury Department, American Airlines CEO Doug Parker acknowledged he has no idea when the industry can recover.

Anyone’s guess

Parker told CNBC in a Wednesday interview his guess is no better than anyone else in predicting when large-scale air travel will return. In fact, traffic across all American airports hit this week a new low of less than 90,000 total passengers.

The executive said he is seeing “very preliminary” signs the industry could start to rebound but it is “certainly not happening today.” Specifically, bookings for flights that are more than 90 days out started to “tick up a little bit” although these flights can be canceled. Corporate conventions are now in the planning stage for the fourth quarter, as opposed to nearly zero activity in the second quarter and third quarter.

Nevertheless, whenever the world is ready to fly again, the CEO said, American Airlines will be “in place and ready to take care of them.”

The industry as a whole can help reassure its customers in an era of “social distancing” by blocking the middle seats and extensive cleaning of the aircrafts. These and other actions could stay in place for quite some time to ensure customers feel safe when demand does rebound.

Cash plans

The company was on the receiving end of $5.8 billion in total assistance from the federal government, including a $4.1 billion grant and a $1.7 billion loan which carries low interest. American Airlines confirmed it will apply for an incremental $4.75 billion in other government loans.

For the time being, the airliner will continue with its prior trajectory of aircraft orders, including the still-grounded Boeing 737 Max. The company also plans on retiring older planes earlier than expected. The purpose of this is to emerge from the coronavirus pandemic with a smaller fleet of planes.

“The new airplanes that are scheduled to come, we want,” Parker told CNBC. “We don’t have any intention of working with the manufacturers to defer or cancel any of those orders.”

Oil prices

Despite what many would expect, low oil prices merely “ameliorates” American Airlines business today but not in any significant way given the plunge in business activity, the CEO said. But if the post coronavirus rebound is slow then oil prices will rise at a similarly slow pace.