FORT WORTH, Texas — Derek Kerr may have the hardest task in the airlinecompany service.
Kerr is the chief monetary officer of American Airlines, and his job is to repair a balance sheet that hasactually been damaged by loaning required to endure the pandemic.
American has the most financialobligation amongst all U.S. airlines, more than $36 billion. The airlinecompany is attempting to fly through a rough healing in travel throughout which profits is increasing however so are expenses like fuel and labor.
Kerr spoke justrecently to The Associated Press. The responses haveactually been modified for length.
Q. American is coming off its veryfirst successful quarter, omitting federalgovernment help, consideringthat the pandemic began. Planes are loaded. What’s going to occur to earnings after Labor Day, when leisure travel slows down?
A. Leisure is truly, truly strong. Small company is back 100% likewise, since those organizations had to makeitthrough, they are out flying. Corporate company is back about 65%, 75%. As we appearance out at reservations … we wear’t see any substantial modification from a earnings viewpoint as we go forward.
Q. Spot costs for jet fuel costs have alleviated in the last couple of months, however they’re still double the cost priorto the pandemic. Why doesn’t American hedge versus fuel spikes like Southwest does?
A. Hedging is insurancecoverage. It’s really pricey, and you can’t guarantee your whole portfolio of fuel. The airlinecompany market is the No. 2 user of fuel. If we all hedged fuel, we’d relocation the fuel rate and really drive the fuel cost up. Plus you put a threat on the business (if oil costs fall). And then the last thing is you have a natural hedge today — as fuel increases, the market can raise earnings. We haveactually passed on quite much the fuel increases that are out there.
Q. American anticipates nonfuel expenses in the 3rd quarter will be up 12% to 14% compared with the 3rd quarter of 2019 on a per seat, per mile basis. Can you get expenses under control?
A. It’s not always a expense problem, it’s a usage of the fleet concern. If we flew our whole fleet, that (cost per seat per mile) would just be up about 2%. We’ve constructed these airlinecompanies, from a expense viewpoint, to fly more, and we’re not flying more duetothefactthat of the resources that we requirement to do that.
Q. How will you fly more? Do you requirement more pilots?
A. There is a pilot scarcity at the (regional airlinecompanies) since the mainline providers (like American, Delta and United) hire from the regionals. We’ll continue to work through that. That might take a couple of years to willpower itsel