American Airlines Group Inc. (NASDAQ:AAL) Q2 2020 Earnings Conference Call - Final Transcript
Jul 23, 2020 • 08:30 am ET
America West Airlines team. The past five months have been more than difficult and our team has consistently risen to the challenge, taking care of the customers and each other as the stability of their own employment remains uncertain. Our team does this and much more each and everyday. To say that they are leading through this crisis with grace is an understatement of enormous proportion and we are all humbled by their work ethic and professionalism.
Turning now to the actions that we are taking in the face of COVID-19, the resulting severe disruption to global demand for air travel, in short, the crisis continues. Our team has done an exceptional job managing through that crisis as evidenced by the trends we saw throughout the second quarter and we're prepared to weather the storm ahead and be in a position to succeed when demand recovers.
In the near term, our actions are centered on three pillars, building up our cash reserves, conserving the cash we do use, and adjusting the way we fly so that when our customers return to the skies, they can do so with complete confidence, confidence and safe and enjoyable to do so. And moreover, we are flying when and where they want to go.
So first on cash, we ended the second quarter with $10.2 billion of available liquidity, which included an important net $3.6 billion that we raised during the quarter through the capital markets. We also have a signed term sheet with the US Department of Treasury for an additional $4.75 billion secured loan under the CARES Act and we expect that loan to close in the third quarter.
In addition, we announced this morning two senior secured note transactions with Goldman Sachs Merchant Bank, totaling $1.2 billion. So when those transactions are combined with our quarter-ending liquidity balance of $10.2 billion, we would have a pro forma liquidity balance of approximately $16.2 billion and we'll have flexibility to raise more if needed and Derek will talk about that in a few minutes.
With regard to conserving cash and our cash burn, our daily cash burn rate for the quarter was around $55 million, which was better than our prior guidance of $70 million per day. We are particularly pleased with the rate of improvements throughout the quarter. That daily burn was nearly $100 million per day in April; then around $56 million in May, and was $30 million per day for the month of June. That improvement was driven by both aggressive cost management, which Derek will discuss in more detail, and significant revenue growth throughout the period.
As to revenue, demand was at its lowest point in April, of course, and we had a remarkably low system load factor of 15% and a remarkably low passenger revenue per ASM of $1.08. But as several states began to reopen, we began to see demand increase, particularly in some markets where we have a network advantage. So with some aircraft ownership and