American Airlines - The impact of COVID-19: Case Study

American Airlines - The impact of COVID-19: Case Study

Summary

Recent months have been unprecedented for airlines. Travel restrictions, flight suspensions, falling consumer confidence and acute financial problems are just some of the issues airlines are having to contend with. As the industry’s largest player, American Airlines has been impacted more than most.

Key Highlights

- American Airlines has experienced various major impacts including major economic loss from capacity reductions of flights and is facing criticism for how the airline is responding. This includes allegations of buying shares back in an attempt to drive up the price.
- Drastic flight reductions - Demand for air travel has dropped markedly, meaning the airline has been forced to suspend flights due to travel restrictions and cut flights which are no longer profitable.
- Massive economic loss with the need for government support - Airlines are a capital-intensive business. It costs a lot of money to keep one operational and they burn through cash at a rapid rate. This is a particular issue at present as there is currently very little money coming in.
- American Airlines has seen its share prices decrease dramatically since COVID-19 started showing grave impacts in the US.
- The financial results were released on 29th April and were worse than anticipated. This caused the share price to drop and the impact on the airline. Is projected to be worse in Q2.

Scope

- This case study looks at how the COVID-19 pandemic is impacting American Airlines and assesses the company's response.

Reasons to Buy

- Gain an overview of the current global COVID-19 situation
- Understand the impact that COVID-19 is having on the airline industry
- Assess the impact on American Airlines
- Understand what the future may hold for the airline