Alaska Air's Cash Burn Beats Expectations Again
The COVID-19 pandemic has made 2020 a rough year for airlines. Alaska Air (NYSE: ALK) has been no exception. By late March, the company was burning cash at a pace of over $400 million per month. That's a huge amount of money for an airline its size: Over the past five years, Alaska's annual free cash flow has averaged less than $700 million.
Fortunately, the Alaska Airlines parent was able to control cash burn a little better last quarter. And just last week, the company gave investors good news about cash burn for the months of July and August. That keeps Alaska Air on track for a gradual march back to cash breakeven.
While Alaska Air was burning through cash at a worrisome pace at the beginning of the second quarter, this was largely due to the abrupt nature of the pandemic-induced demand downturn. On March 1, passenger throughput at Transportation Security Administration checkpoints was within 1% of 2019 levels. By April 1, throughput was down 94% year over year. It took time for Alaska and other airlines to slash their flight schedules to align with demand. A spate of refunds also contributed to high cash burn initially.
Source Fool.com
