American Airlines CFO on fixing balance sheet after pandemic
Derek Kerr might have the hardest job in the airline business. Kerr is the CFO of American Airlines, and his task is to fix a balance sheet that has been battered by borrowing needed to survive the pandemic. American has the most debt among all US airlines, more than $36b. The airline is trying to fly through a bumpy recovery in travel during which revenue is rising but so are costs like fuel and labor. Story features transcript of interview. With quotes including: "Leisure is really, really strong. Small business is back 100% also, because those businesses had to survive, they are out flying. Corporate business is back about 65%, 75%. As we look out at bookings ... we don’t see any huge change from a revenue standpoint as we go forward." And: "A. "Hedging is insurance. It’s very expensive, and you can’t insure your entire portfolio of fuel. The airline industry is the No. 2 user of fuel. If we all hedged fuel, we’d move the fuel price and actually drive the fuel price up. Plus you put a risk on the company (if oil prices fall). And then the last thing is you have a natural hedge today — as fuel increases, the industry can raise revenues. We have passed on pretty much the fuel increases that are out there."<br/>
https://portal.staralliance.com/cms/news/hot-topics/2022-08-09/oneworld/american-airlines-cfo-on-fixing-balance-sheet-after-pandemic
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American Airlines CFO on fixing balance sheet after pandemic
Derek Kerr might have the hardest job in the airline business. Kerr is the CFO of American Airlines, and his task is to fix a balance sheet that has been battered by borrowing needed to survive the pandemic. American has the most debt among all US airlines, more than $36b. The airline is trying to fly through a bumpy recovery in travel during which revenue is rising but so are costs like fuel and labor. Story features transcript of interview. With quotes including: "Leisure is really, really strong. Small business is back 100% also, because those businesses had to survive, they are out flying. Corporate business is back about 65%, 75%. As we look out at bookings ... we don’t see any huge change from a revenue standpoint as we go forward." And: "A. "Hedging is insurance. It’s very expensive, and you can’t insure your entire portfolio of fuel. The airline industry is the No. 2 user of fuel. If we all hedged fuel, we’d move the fuel price and actually drive the fuel price up. Plus you put a risk on the company (if oil prices fall). And then the last thing is you have a natural hedge today — as fuel increases, the industry can raise revenues. We have passed on pretty much the fuel increases that are out there."<br/>
