The domestic airline industry has slowly seen TSA traffic rise to 36% of 2019 levels, but the market is now fearing another COVID-19 wave. American Airlines Group (AAL) might take a hit from some irrational fears, but the airline continues to make progress on cutting daily cash burn. My investment thesis remains bullish on the airline for a rebound as traffic eventually reaches more normal levels.
Image Source: American Airlines website
Misunderstood Cash Burn
For whatever reason, the airlines including American Airlines have regularly provided the investment community with numbers that unnecessarily scare investors away. For Q3, the airline did this with daily cash burn rates that appeared far off forecasts.
American Airlines had originally forecast a Q3 daily cash burn rate of improving on the June daily burn rate of $30 million. The airline actually hit the market with a daily…