American Airlines Group Reports Second-Quarter Profit
- Recorded a second-quarter 2017 pre-tax profit of
$1.3 billion , or$1.5 billion excluding net special items,1 and net profit of$803 million , or$944 million excluding net special items - Reported second-quarter earnings of
$1.63 per diluted share. Diluted earnings per share excluding net special items were$1.92 , up 8.5 percent versus 2016 - Reported a 7.2 percent increase in total revenue, to
$11.1 billion , and a 5.7 percent increase in total revenue per available seat mile (TRASM) - Returned
$500 million to stockholders in the second quarter through the repurchase of 10.0 million shares for$450 million and dividends of$50 million
“We are making important long-term investments in our product and our team at
GAAP | Non-GAAP1 | ||||||||||||||||
2Q17 |
2Q16 | 2Q17 |
2Q16 | ||||||||||||||
Total operating revenues ($ mil) | $ | 11,105 | $ | 10,363 | $ | 11,105 | $ | 10,363 | |||||||||
Total operating expenses ($ mil) | 9,570 | 8,612 | 9,367 | 8,547 | |||||||||||||
Operating income ($ mil) | 1,535 | 1,751 | 1,738 | 1,816 | |||||||||||||
Pre-tax income ($ mil) | 1,291 | 1,493 | 1,496 | 1,594 | |||||||||||||
Pre-tax margin | 11.6 | % | 14.4 | % | 13.5 | % | 15.4 | % | |||||||||
Net income ($ mil) | 803 | 950 | 944 | 1,001 | |||||||||||||
Earnings per diluted share | $ | 1.63 | $ | 1.68 | $ | 1.92 | $ | 1.77 | |||||||||
Revenue and Expenses
Strong passenger demand and improving yields drove a 7.2 percent year-over-year increase in total revenue, to
Total second-quarter operating expenses were
Commercial Initiatives
American has now expanded Basic Economy into 78 markets, including into
With an average premium of more than
As part of its
“We expect third-quarter TRASM to increase approximately 0.5 to 2.5 percent year-over-year, which reflects continued improvement in customer demand for corporate and leisure travel. We expect third-quarter pre-tax margin excluding special items to be between 10.0 and 12.0 percent.2 We also expect our fourth-quarter TRASM growth to exceed the third quarter’s growth rate,” Isom said.
Capital Investments, Fleet, and Shareholder Returns
American plans to invest
Since mid-2014, the company has returned more than
The company declared a dividend of
Investor Update
For additional financial forecasting detail, please refer to the company’s investor relations update, filed with the
Conference Call / Webcast Details
The company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through August 28.
Notes
- In the second quarter, the company recognized
$205 million in net special items before the effect of income taxes, principally consisting of merger integration expenses, fleet restructuring expenses driven by the merger and certain one-time charges to adjust the vacation accruals as a result of the salary increases for our pilots and flight attendants. See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information. - American is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of special items cannot be determined at this time.
- Share repurchases under the buyback program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The program does not obligate the company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at the company's discretion.
About
Cautionary Statement Regarding Forward-Looking Statements and Information
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of the Securities Act of 1933, as amended (the Securities Act), the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about our plans, objectives, expectations, intentions, estimates and strategies for the future, and other statements that are not historical facts. These forward-looking statements are based on our current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to, those set forth in our Quarterly Report on Form 10-Q for the quarter ended
American Airlines Group Inc. | |||||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
(In millions, except share and per share amounts) | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
3 Months Ended June 30, |
Percent | 6 Months Ended June 30, |
Percent | ||||||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||
Mainline passenger | $ | 7,747 | $ | 7,209 | 7.5 | $ | 14,353 | $ | 13,773 | 4.2 | |||||||||||||
Regional passenger | 1,835 | 1,786 | 2.8 | 3,384 | 3,309 | 2.3 | |||||||||||||||||
Cargo | 196 | 174 | 13.1 | 368 | 336 | 9.8 | |||||||||||||||||
Other | 1,327 | 1,194 | 11.1 | 2,624 | 2,380 | 10.2 | |||||||||||||||||
Total operating revenues | 11,105 | 10,363 | 7.2 | 20,729 | 19,798 | 4.7 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Aircraft fuel and related taxes | 1,510 | 1,314 | 14.9 | 2,912 | 2,343 | 24.2 | |||||||||||||||||
Salaries, wages and benefits | 3,003 | 2,670 | 12.5 | 5,829 | 5,322 | 9.5 | |||||||||||||||||
Regional expenses: | |||||||||||||||||||||||
Fuel | 329 | 279 | 18.0 | 648 | 498 | 30.0 | |||||||||||||||||
Other | 1,291 | 1,239 | 4.3 | 2,546 | 2,452 | 3.8 | |||||||||||||||||
Maintenance, materials and repairs | 495 | 453 | 9.4 | 987 | 871 | 13.3 | |||||||||||||||||
Other rent and landing fees | 452 | 458 | (1.2 | ) | 892 | 879 | 1.5 | ||||||||||||||||
Aircraft rent | 294 | 302 | (2.8 | ) | 589 | 609 | (3.3 | ) | |||||||||||||||
Selling expenses | 376 | 334 | 12.5 | 694 | 642 | 8.0 | |||||||||||||||||
Depreciation and amortization | 418 | 374 | 11.5 | 822 | 729 | 12.8 | |||||||||||||||||
Special items, net | 202 | 62 | nm | 320 | 161 | 99.4 | |||||||||||||||||
Other | 1,200 | 1,127 | 6.5 | 2,354 | 2,205 | 6.8 | |||||||||||||||||
Total operating expenses | 9,570 | 8,612 | 11.1 | 18,593 | 16,711 | 11.3 | |||||||||||||||||
Operating income | 1,535 | 1,751 | (12.3 | ) | 2,136 | 3,087 | (30.8 | ) | |||||||||||||||
Nonoperating income (expense): | |||||||||||||||||||||||
Interest income | 24 | 16 | 52.7 | 45 | 28 | 57.7 | |||||||||||||||||
Interest expense, net | (263 | ) | (249 | ) | 5.8 | (520 | ) | (488 | ) | 6.6 | |||||||||||||
Other, net | (5 | ) | (25 | ) | (80.6 | ) | (5 | ) | (17 | ) | (69.2 | ) | |||||||||||
Total nonoperating expense, net | (244 | ) | (258 | ) | (5.5 | ) | (480 | ) | (477 | ) | 0.8 | ||||||||||||
Income before income taxes | 1,291 | 1,493 | (13.5 | ) | 1,656 | 2,610 | (36.6 | ) | |||||||||||||||
Income tax provision | 488 | 543 | (10.1 | ) | 619 | 960 | (35.6 | ) | |||||||||||||||
Net income | $ | 803 | $ | 950 | (15.5 | ) | $ | 1,037 | $ | 1,650 | (37.2 | ) | |||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | $ | 1.64 | $ | 1.69 | $ | 2.08 | $ | 2.82 | |||||||||||||||
Diluted | $ | 1.63 | $ | 1.68 | $ | 2.07 | $ | 2.80 | |||||||||||||||
Weighted average shares outstanding (in thousands): | |||||||||||||||||||||||
Basic | 490,818 | 563,000 | 497,360 | 584,622 | |||||||||||||||||||
Diluted | 492,965 | 566,040 | 500,381 | 588,764 | |||||||||||||||||||
Note: Percent change may not recalculate due to rounding. | |||||||||||||||||||||||
American Airlines Group Inc. | |||||||||||||||||
Consolidated Operating Statistics | |||||||||||||||||
(Unaudited) | |||||||||||||||||
3 Months Ended June 30, |
6 Months Ended June 30, |
||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | ||||||||||||
Mainline | |||||||||||||||||
Revenue passenger miles (millions) | 53,177 | 51,927 | 2.4 | % | 98,388 | 98,147 | 0.2 | % | |||||||||
Available seat miles (ASM) (millions) | 63,520 | 62,670 | 1.4 | % | 120,083 | 120,234 | (0.1 | ) | % | ||||||||
Passenger load factor (percent) | 83.7 | 82.9 | 0.8 | pts | 81.9 | 81.6 | 0.3 | pts | |||||||||
Yield (cents) | 14.57 | 13.88 | 4.9 | % | 14.59 | 14.03 | 4.0 | % | |||||||||
Passenger revenue per ASM (cents) | 12.20 | 11.50 | 6.0 | % | 11.95 | 11.46 | 4.3 | % | |||||||||
Passenger enplanements (thousands) | 37,767 | 37,699 | 0.2 | % | 71,522 | 72,246 | (1.0 | ) | % | ||||||||
Departures (thousands) | 278 | 283 | (1.7 | ) | % | 541 | 555 | (2.5 | ) | % | |||||||
Aircraft at end of period | 956 | 947 | 1.0 | % | 956 | 947 | 1.0 | % | |||||||||
Block hours (thousands) | 896 | 901 | (0.5 | ) | % | 1,715 | 1,746 | (1.8 | ) | % | |||||||
Average stage length (miles) | 1,254 | 1,241 | 1.0 | % | 1,228 | 1,223 | 0.4 | % | |||||||||
Fuel consumption (gallons in millions) | 934 | 931 | 0.4 | % | 1,766 | 1,786 | (1.1 | ) | % | ||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.62 | 1.41 | 14.5 | % | 1.65 | 1.31 | 25.7 | % | |||||||||
Full-time equivalent employees at end of period | 106,100 | 103,100 | 2.9 | % | 106,100 | 103,100 | 2.9 | % | |||||||||
Operating cost per ASM (cents) | 12.51 | 11.32 | 10.6 | % | 12.82 | 11.45 | 12.0 | % | |||||||||
Operating cost per ASM excluding special items (cents) | 12.20 | 11.22 | 8.7 | % | 12.56 | 11.31 | 11.0 | % | |||||||||
Operating cost per ASM excluding special items and fuel (cents) | 9.82 | 9.12 | 7.6 | % | 10.13 | 9.36 | 8.2 | % | |||||||||
Regional (A) | |||||||||||||||||
Revenue passenger miles (millions) | 6,387 | 6,409 | (0.3 | ) | % | 12,160 | 11,959 | 1.7 | % | ||||||||
Available seat miles (millions) | 8,223 | 8,081 | 1.7 | % | 16,000 | 15,581 | 2.7 | % | |||||||||
Passenger load factor (percent) | 77.7 | 79.3 | (1.6 | ) | pts | 76.0 | 76.8 | (0.8 | ) | pts | |||||||
Yield (cents) | 28.74 | 27.87 | 3.1 | % | 27.83 | 27.67 | 0.6 | % | |||||||||
Passenger revenue per ASM (cents) | 22.32 | 22.10 | 1.0 | % | 21.15 | 21.24 | (0.4 | ) | % | ||||||||
Passenger enplanements (thousands) | 14,049 | 14,252 | (1.4 | ) | % | 26,654 | 26,620 | 0.1 | % | ||||||||
Aircraft at end of period | 627 | 600 | 4.5 | % | 627 | 600 | 4.5 | % | |||||||||
Fuel consumption (gallons in millions) | 195 | 191 | 1.8 | % | 377 | 369 | 2.2 | % | |||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.69 | 1.46 | 15.9 | % | 1.72 | 1.35 | 27.2 | % | |||||||||
Full-time equivalent employees at end of period (B) | 22,200 | 20,400 | 8.8 | % | 22,200 | 20,400 | 8.8 | % | |||||||||
Operating cost per ASM (cents) | 19.71 | 18.78 | 4.9 | % | 19.96 | 18.94 | 5.4 | % | |||||||||
Operating cost per ASM excluding special items (cents) | 19.69 | 18.75 | 5.0 | % | 19.94 | 18.88 | 5.6 | % | |||||||||
Operating cost per ASM excluding special items and fuel (cents) | 15.69 | 15.29 | 2.6 | % | 15.89 | 15.68 | 1.3 | % | |||||||||
Total Mainline & Regional | |||||||||||||||||
Revenue passenger miles (millions) | 59,564 | 58,336 | 2.1 | % | 110,548 | 110,106 | 0.4 | % | |||||||||
Available seat miles (millions) | 71,743 | 70,751 | 1.4 | % | 136,083 | 135,815 | 0.2 | % | |||||||||
Cargo ton miles (millions) | 701 | 610 | 15.1 | % | 1,321 | 1,153 | 14.5 | % | |||||||||
Passenger load factor (percent) | 83.0 | 82.5 | 0.5 | pts | 81.2 | 81.1 | 0.1 | pts | |||||||||
Yield (cents) | 16.09 | 15.42 | 4.3 | % | 16.04 | 15.51 | 3.4 | % | |||||||||
Passenger revenue per ASM (cents) | 13.36 | 12.71 | 5.0 | % | 13.03 | 12.58 | 3.6 | % | |||||||||
Total revenue per ASM (cents) | 15.48 | 14.65 | 5.7 | % | 15.23 | 14.58 | 4.5 | % | |||||||||
Cargo yield per ton mile (cents) | 27.98 | 28.48 | (1.7 | ) | % | 27.88 | 29.09 | (4.1 | ) | % | |||||||
Passenger enplanements (thousands) | 51,816 | 51,951 | (0.3 | ) | % | 98,176 | 98,866 | (0.7 | ) | % | |||||||
Aircraft at end of period | 1,583 | 1,547 | 2.3 | % | 1,583 | 1,547 | 2.3 | % | |||||||||
Fuel consumption (gallons in millions) | 1,129 | 1,122 | 0.6 | % | 2,143 | 2,155 | (0.6 | ) | % | ||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 1.63 | 1.42 | 14.7 | % | 1.66 | 1.32 | 26.0 | % | |||||||||
Full-time equivalent employees at end of period (B) | 128,300 | 123,500 | 3.9 | % | 128,300 | 123,500 | 3.9 | % | |||||||||
Operating cost per ASM (cents) | 13.34 | 12.17 | 9.6 | % | 13.66 | 12.30 | 11.0 | % | |||||||||
Operating cost per ASM excluding special items (cents) | 13.06 | 12.08 | 8.1 | % | 13.42 | 12.18 | 10.2 | % | |||||||||
Operating cost per ASM excluding special items and fuel (cents) | 10.49 | 9.83 | 6.8 | % | 10.81 | 10.09 | 7.1 | % | |||||||||
(A) Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers. | |||||||||||||||||
(B) Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries. | |||||||||||||||||
Note: Amounts may not recalculate due to rounding. | |||||||||||||||||
American Airlines Group Inc. | ||||||||||||||||||
Consolidated Revenue Statistics by Region | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
3 Months Ended June 30, |
6 Months Ended June 30, |
|||||||||||||||||
2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||
Domestic - Mainline | ||||||||||||||||||
Revenue passenger miles (millions) | 32,779 | 33,418 | (1.9 | ) | % | 62,310 | 63,808 | (2.3 | ) | % | ||||||||
Available seat miles (ASM) (millions) | 38,092 | 38,701 | (1.6 | ) | % | 73,897 | 75,244 | (1.8 | ) | % | ||||||||
Passenger load factor (percent) | 86.1 | 86.3 | (0.2 | ) | pts | 84.3 | 84.8 | (0.5 | ) | pts | ||||||||
Yield (cents) | 15.55 | 14.47 | 7.4 | % | 15.44 | 14.59 | 5.8 | % | ||||||||||
Passenger revenue per ASM (cents) | 13.38 | 12.49 | 7.1 | % | 13.02 | 12.37 | 5.2 | % | ||||||||||
Domestic Consolidated - Mainline and | ||||||||||||||||||
Total Regional (A) | ||||||||||||||||||
Revenue passenger miles (millions) | 39,166 | 39,826 | (1.7 | ) | % | 74,470 | 75,767 | (1.7 | ) | % | ||||||||
Available seat miles (millions) | 46,315 | 46,782 | (1.0 | ) | % | 89,897 | 90,825 | (1.0 | ) | % | ||||||||
Passenger load factor (percent) | 84.6 | 85.1 | (0.5 | ) | pts | 82.8 | 83.4 | (0.6 | ) | pts | ||||||||
Yield (cents) | 17.70 | 16.63 | 6.4 | % | 17.46 | 16.65 | 4.8 | % | ||||||||||
Passenger revenue per ASM (cents) | 14.96 | 14.15 | 5.7 | % | 14.46 | 13.89 | 4.1 | % | ||||||||||
Latin America | ||||||||||||||||||
Revenue passenger miles (millions) | 7,592 | 7,421 | 2.3 | % | 15,082 | 15,476 | (2.5 | ) | % | |||||||||
Available seat miles (millions) | 9,739 | 9,469 | 2.9 | % | 19,513 | 19,949 | (2.2 | ) | % | |||||||||
Passenger load factor (percent) | 78.0 | 78.4 | (0.4 | ) | pts | 77.3 | 77.6 | (0.3 | ) | pts | ||||||||
Yield (cents) | 14.64 | 12.65 | 15.7 | % | 14.76 | 13.24 | 11.5 | % | ||||||||||
Passenger revenue per ASM (cents) | 11.41 | 9.91 | 15.1 | % | 11.41 | 10.27 | 11.1 | % | ||||||||||
Atlantic | ||||||||||||||||||
Revenue passenger miles (millions) | 8,849 | 7,879 | 12.3 | % | 13,349 | 12,680 | 5.3 | % | ||||||||||
Available seat miles (millions) | 10,927 | 10,677 | 2.3 | % | 17,342 | 17,570 | (1.3 | ) | % | |||||||||
Passenger load factor (percent) | 81.0 | 73.8 | 7.2 | pts | 77.0 | 72.2 | 4.8 | pts | ||||||||||
Yield (cents) | 13.04 | 14.34 | (9.1 | ) | % | 13.20 | 14.39 | (8.3 | ) | % | ||||||||
Passenger revenue per ASM (cents) | 10.56 | 10.58 | (0.2 | ) | % | 10.16 | 10.38 | (2.2 | ) | % | ||||||||
Pacific | ||||||||||||||||||
Revenue passenger miles (millions) | 3,957 | 3,209 | 23.3 | % | 7,647 | 6,183 | 23.7 | % | ||||||||||
Available seat miles (millions) | 4,762 | 3,823 | 24.6 | % | 9,331 | 7,471 | 24.9 | % | ||||||||||
Passenger load factor (percent) | 83.1 | 83.9 | (0.8 | ) | pts | 82.0 | 82.8 | (0.8 | ) | pts | ||||||||
Yield (cents) | 9.75 | 9.52 | 2.4 | % | 9.78 | 9.60 | 1.9 | % | ||||||||||
Passenger revenue per ASM (cents) | 8.10 | 7.99 | 1.3 | % | 8.01 | 7.94 | 0.9 | % | ||||||||||
Total International | ||||||||||||||||||
Revenue passenger miles (millions) | 20,398 | 18,509 | 10.2 | % | 36,078 | 34,339 | 5.1 | % | ||||||||||
Available seat miles (millions) | 25,428 | 23,969 | 6.1 | % | 46,186 | 44,990 | 2.7 | % | ||||||||||
Passenger load factor (percent) | 80.2 | 77.2 | 3.0 | pts | 78.1 | 76.3 | 1.8 | pts | ||||||||||
Yield (cents) | 13.00 | 12.83 | 1.3 | % | 13.12 | 13.01 | 0.9 | % | ||||||||||
Passenger revenue per ASM (cents) | 10.42 | 9.90 | 5.3 | % | 10.25 | 9.93 | 3.3 | % | ||||||||||
(A) Revenue statistics for all Regional flying are included herein. | ||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information | ||||||||||||||||||||||||||
American Airlines Group Inc. (the “Company”) sometimes uses financial measures that are derived from the consolidated financial statements but that are not presented in accordance with GAAP to understand and evaluate its current operating performance and to allow for period-to-period comparisons. The Company believes these non-GAAP financial measures may also provide useful information to investors and others. These non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies, and should be considered in addition to and not as a substitute for or superior to, any measure of performance, cash flow or liquidity prepared in accordance with GAAP. The Company is providing a reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The tables below present the reconciliations of the following GAAP measures to their non-GAAP measure: - Pre-Tax Income (GAAP measure) to Pre-Tax Income Excluding Special Items (non-GAAP measure) - Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Special Items (non-GAAP measure) - Net Income (GAAP measure) to Net Income Excluding Special Items (non-GAAP measure) - Basic and Diluted Earnings Per Share (GAAP measure) to Basic and Diluted Earnings Per Share Excluding Special Items (non-GAAP measure) - Operating Income (GAAP measure) to Operating Income Excluding Special Items (non-GAAP measure) Management uses these non-GAAP financial measures to evaluate the Company's current operating performance and to allow for period-to-period comparisons. As special items may vary from period-to-period in nature and amount, the adjustment to exclude special items allows management an additional tool to better understand the Company’s core operating performance. Additionally, the tables below present the reconciliations of mainline, regional and total operating costs (GAAP measure) to mainline, regional and total operating costs excluding special items and fuel (non-GAAP measure). Management uses mainline, regional and total operating costs excluding special items and fuel to evaluate the Company's current operating performance and for period-to-period comparisons. The price of fuel, over which the Company has no control, impacts the comparability of period-to-period financial performance. The adjustment to exclude aircraft fuel and special items allows management an additional tool to better understand and analyze the Company’s non-fuel costs and core operating performance. |
||||||||||||||||||||||||||
3 Months Ended June 30, |
Percent Change | 6 Months Ended June 30, |
Percent Change | |||||||||||||||||||||||
Reconciliation of Pre-Tax Income Excluding Special Items | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||
Pre-tax income as reported | $ | 1,291 | $ | 1,493 | $ | 1,656 | $ | 2,610 | ||||||||||||||||||
Pre-tax special items: | ||||||||||||||||||||||||||
Special items, net (1) | 202 | 62 | 320 | 161 | ||||||||||||||||||||||
Regional operating special items, net | 1 | 3 | 4 | 8 | ||||||||||||||||||||||
Nonoperating special items, net (2) | 2 | 36 | 7 | 36 | ||||||||||||||||||||||
Total pre-tax special items | 205 | 101 | 331 | 205 | ||||||||||||||||||||||
Pre-tax income excluding special items | $ | 1,496 | $ | 1,594 | -6 | % | $ | 1,987 | $ | 2,815 | -29 | % | ||||||||||||||
Calculation of Pre-Tax Margin | ||||||||||||||||||||||||||
Pre-tax income as reported | $ | 1,291 | $ | 1,493 | $ | 1,656 | $ | 2,610 | ||||||||||||||||||
Total operating revenues as reported | $ | 11,105 | $ | 10,363 | $ | 20,729 | $ | 19,798 | ||||||||||||||||||
Pre-tax margin | 11.6 | % | 14.4 | % | 8.0 | % | 13.2 | % | ||||||||||||||||||
Calculation of Pre-Tax Margin Excluding Special Items | ||||||||||||||||||||||||||
Pre-tax income excluding special items | $ | 1,496 | $ | 1,594 | $ | 1,987 | $ | 2,815 | ||||||||||||||||||
Total operating revenues as reported | $ | 11,105 | $ | 10,363 | $ | 20,729 | $ | 19,798 | ||||||||||||||||||
Pre-tax margin excluding special items | 13.5 | % | 15.4 | % | 9.6 | % | 14.2 | % | ||||||||||||||||||
Reconciliation of Net Income Excluding Special Items | ||||||||||||||||||||||||||
Net income as reported | $ | 803 | $ | 950 | $ | 1,037 | $ | 1,650 | ||||||||||||||||||
Special items: | ||||||||||||||||||||||||||
Total pre-tax special items (1) (2) | 205 | 101 | 331 | 205 | ||||||||||||||||||||||
Net tax effect of special items | (64 | ) | (50 | ) | (116 | ) | (89 | ) | ||||||||||||||||||
Net income excluding special items | $ | 944 | $ | 1,001 | -6 | % | $ | 1,252 | $ | 1,766 | -29 | % | ||||||||||||||
Reconciliation of Basic and Diluted Earnings Per Share Excluding | 3 Months Ended June 30, |
6 Months Ended June 30, |
||||||||||||||||||||||||
Special Items | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions, except per share amounts) | (in millions, except per share amounts) | |||||||||||||||||||||||||
Net income excluding special items | $ | 944 | $ | 1,001 | $ | 1,252 | $ | 1,766 | ||||||||||||||||||
Shares used for computation (in thousands): | ||||||||||||||||||||||||||
Basic | 490,818 | 563,000 | 497,360 | 584,622 | ||||||||||||||||||||||
Diluted | 492,965 | 566,040 | 500,381 | 588,764 | ||||||||||||||||||||||
Earnings per share excluding special items: | ||||||||||||||||||||||||||
Basic | $ | 1.92 | $ | 1.78 | $ | 2.52 | $ | 3.02 | ||||||||||||||||||
Diluted | $ | 1.92 | $ | 1.77 | $ | 2.50 | $ | 3.00 | ||||||||||||||||||
Reconciliation of Operating Income Excluding Special Items | ||||||||||||||||||||||||||
Operating income as reported | $ | 1,535 | $ | 1,751 | $ | 2,136 | $ | 3,087 | ||||||||||||||||||
Special items: | ||||||||||||||||||||||||||
Special items, net (1) | 202 | 62 | 320 | 161 | ||||||||||||||||||||||
Regional operating special items, net | 1 | 3 | 4 | 8 | ||||||||||||||||||||||
Operating income excluding special items | $ | 1,738 | $ | 1,816 | $ | 2,460 | $ | 3,256 | ||||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended June 30, |
6 Months Ended June 30, |
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Items and Fuel - Mainline only | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||
Total operating expenses as reported | $ | 9,570 | $ | 8,612 | $ | 18,593 | $ | 16,711 | ||||||||||||||||||
Less regional expenses as reported: | ||||||||||||||||||||||||||
Fuel | (329 | ) | (279 | ) | (648 | ) | (498 | ) | ||||||||||||||||||
Other | (1,291 | ) | (1,239 | ) | (2,546 | ) | (2,452 | ) | ||||||||||||||||||
Total mainline operating expenses as reported | 7,950 | 7,094 | 15,399 | 13,761 | ||||||||||||||||||||||
Special items, net (1) | (202 | ) | (62 | ) | (320 | ) | (161 | ) | ||||||||||||||||||
Mainline operating expenses, excluding special items | 7,748 | 7,032 | 15,079 | 13,600 | ||||||||||||||||||||||
Aircraft fuel and related taxes | (1,510 | ) | (1,314 | ) | (2,912 | ) | (2,343 | ) | ||||||||||||||||||
Mainline operating expenses, excluding special items and fuel | $ | 6,238 | $ | 5,718 | $ | 12,167 | $ | 11,257 | ||||||||||||||||||
(in cents) | (in cents) | |||||||||||||||||||||||||
Mainline operating expenses per ASM as reported | 12.51 | 11.32 | 12.82 | 11.45 | ||||||||||||||||||||||
Special items, net per ASM (1) | (0.32 | ) | (0.10 | ) | (0.27 | ) | (0.13 | ) | ||||||||||||||||||
Mainline operating expenses per ASM, excluding special items | 12.20 | 11.22 | 12.56 | 11.31 | ||||||||||||||||||||||
Aircraft fuel and related taxes per ASM | (2.38 | ) | (2.10 | ) | (2.42 | ) | (1.95 | ) | ||||||||||||||||||
Mainline operating expenses per ASM, excluding special items | ||||||||||||||||||||||||||
and fuel | 9.82 | 9.12 | 10.13 | 9.36 | ||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended June 30, |
6 Months Ended June 30, |
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Items and Fuel - Regional only | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||
Total regional operating expenses as reported | $ | 1,620 | $ | 1,518 | $ | 3,194 | $ | 2,950 | ||||||||||||||||||
Regional operating special items, net | (1 | ) | (3 | ) | (4 | ) | (8 | ) | ||||||||||||||||||
Regional operating expenses, excluding special items | 1,619 | 1,515 | 3,190 | 2,942 | ||||||||||||||||||||||
Aircraft fuel and related taxes | (329 | ) | (279 | ) | (648 | ) | (498 | ) | ||||||||||||||||||
Regional operating expenses, excluding special items and fuel | $ | 1,290 | $ | 1,236 | $ | 2,542 | $ | 2,444 | ||||||||||||||||||
(in cents) | (in cents) | |||||||||||||||||||||||||
Regional operating expenses per ASM as reported | 19.71 | 18.78 | 19.96 | 18.94 | ||||||||||||||||||||||
Regional operating special items, net per ASM | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.05 | ) | ||||||||||||||||||
Regional operating expenses per ASM, excluding special items | 19.69 | 18.75 | 19.94 | 18.88 | ||||||||||||||||||||||
Aircraft fuel and related taxes per ASM | (4.01 | ) | (3.46 | ) | (4.05 | ) | (3.20 | ) | ||||||||||||||||||
Regional operating expenses per ASM, excluding special items and fuel | 15.69 | 15.29 | 15.89 | 15.68 | ||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||||||||||
Reconciliation of Operating Cost per ASM Excluding Special | 3 Months Ended June 30, |
6 Months Ended June 30, |
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Items and Fuel - Total Mainline and Regional | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||||
Total operating expenses as reported | $ | 9,570 | $ | 8,612 | $ | 18,593 | $ | 16,711 | ||||||||||||||||||
Special items: | ||||||||||||||||||||||||||
Special items, net (1) | (202 | ) | (62 | ) | (320 | ) | (161 | ) | ||||||||||||||||||
Regional operating special items, net | (1 | ) | (3 | ) | (4 | ) | (8 | ) | ||||||||||||||||||
Total operating expenses, excluding special items | 9,367 | 8,547 | 18,269 | 16,542 | ||||||||||||||||||||||
Fuel: | ||||||||||||||||||||||||||
Aircraft fuel and related taxes - mainline | (1,510 | ) | (1,314 | ) | (2,912 | ) | (2,343 | ) | ||||||||||||||||||
Aircraft fuel and related taxes - regional | (329 | ) | (279 | ) | (648 | ) | (498 | ) | ||||||||||||||||||
Total operating expenses, excluding special items and fuel | $ | 7,528 | $ | 6,954 | $ | 14,709 | $ | 13,701 | ||||||||||||||||||
(in cents) | (in cents) | |||||||||||||||||||||||||
Total operating expenses per ASM as reported | 13.34 | 12.17 | 13.66 | 12.30 | ||||||||||||||||||||||
Special items per ASM: | ||||||||||||||||||||||||||
Special items, net (1) | (0.28 | ) | (0.09 | ) | (0.24 | ) | (0.12 | ) | ||||||||||||||||||
Regional operating special items, net | - | - | - | (0.01 | ) | |||||||||||||||||||||
Total operating expenses per ASM, excluding special items | 13.06 | 12.08 | 13.42 | 12.18 | ||||||||||||||||||||||
Fuel per ASM: | ||||||||||||||||||||||||||
Aircraft fuel and related taxes - mainline | (2.10 | ) | (1.86 | ) | (2.14 | ) | (1.73 | ) | ||||||||||||||||||
Aircraft fuel and related taxes - regional | (0.46 | ) | (0.39 | ) | (0.48 | ) | (0.37 | ) | ||||||||||||||||||
Total operating expenses per ASM, excluding special items | ||||||||||||||||||||||||||
and fuel | 10.49 | 9.83 | 10.81 | 10.09 | ||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding. | ||||||||||||||||||||||||||
FOOTNOTES: | ||||||||||||||||||||||||||
(1 | ) | The 2017 second quarter mainline operating special items totaled a net charge of $202 million, which principally included $68 million of merger integration expenses, $48 million of fleet restructuring expenses, $45 million of labor contract expenses principally due to one-time charges to adjust the vacation accruals for pilots and flight attendants as a result of the mid-contract pay rate adjustments and a $38 million net charge resulting from fair value adjustments to bankruptcy obligations. The 2017 six month period mainline operating special items totaled a net charge of $320 million, which principally included $130 million of merger integration expenses, $111 million of fleet restructuring expenses, $45 million for the labor contract expenses described above and a $20 million net charge resulting from fair value adjustments to bankruptcy obligations. The 2016 second quarter mainline operating special items totaled a net charge of $62 million, which principally included $97 million of merger integration expenses and $15 million of fleet restructuring expenses, offset in part by a $56 million net credit resulting from fair value adjustments to bankruptcy obligations. The 2016 six month period mainline operating special items totaled a net charge of $161 million, which principally included $201 million of merger integration expenses and $41 million of fleet restructuring expenses, offset in part by a $61 million net credit resulting from fair value adjustments to bankruptcy obligations. Merger integration expenses included costs related to information technology, professional fees, re-branding of aircraft and airport facilities and training. Additionally, the 2016 period also included merger integration expenses related to alignment of labor union contracts, re-branded uniforms, relocation and severance. Fleet restructuring expenses driven by the merger principally included the acceleration of aircraft depreciation and impairments for aircraft grounded or expected to be grounded earlier than planned. |
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(2 | ) | Nonoperating special charges in the 2017 periods primarily consisted of debt issuance and extinguishment costs associated with term loan refinancings. Additionally, the 2016 periods included costs associated with a bond refinancing. | ||||||||||||||||||||||||
American Airlines Group Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In millions) | |||||||||
June 30, 2017 | December 31, 2016 | ||||||||
(unaudited) | |||||||||
Assets | |||||||||
Current assets | |||||||||
Cash | $ | 386 | $ | 322 | |||||
Short-term investments | 6,500 | 6,037 | |||||||
Restricted cash and short-term investments | 554 | 638 | |||||||
Accounts receivable, net | 1,543 | 1,594 | |||||||
Aircraft fuel, spare parts and supplies, net | 1,206 | 1,094 | |||||||
Prepaid expenses and other | 827 | 639 | |||||||
Total current assets | 11,016 | 10,324 | |||||||
Operating property and equipment | |||||||||
Flight equipment | 39,329 | 37,028 | |||||||
Ground property and equipment | 7,580 | 7,116 | |||||||
Equipment purchase deposits | 1,212 | 1,209 | |||||||
Total property and equipment, at cost | 48,121 | 45,353 | |||||||
Less accumulated depreciation and amortization | (15,128 | ) | (14,194 | ) | |||||
Total property and equipment, net | 32,993 | 31,159 | |||||||
Other assets | |||||||||
Goodwill | 4,091 | 4,091 | |||||||
Intangibles, net | 2,224 | 2,173 | |||||||
Deferred tax asset | 905 | 1,498 | |||||||
Other assets | 2,107 | 2,029 | |||||||
Total other assets | 9,327 | 9,791 | |||||||
Total assets | $ | 53,336 | $ | 51,274 | |||||
Liabilities and Stockholders’ Equity | |||||||||
Current liabilities | |||||||||
Current maturities of long-term debt and capital leases | $ | 2,334 | $ | 1,855 | |||||
Accounts payable | 1,924 | 1,592 | |||||||
Accrued salaries and wages | 1,295 | 1,516 | |||||||
Air traffic liability | 5,222 | 3,912 | |||||||
Loyalty program liability | 3,014 | 2,789 | |||||||
Other accrued liabilities | 2,323 | 2,208 | |||||||
Total current liabilities | 16,112 | 13,872 | |||||||
Noncurrent liabilities | |||||||||
Long-term debt and capital leases, net of current maturities | 22,525 | 22,489 | |||||||
Pension and postretirement benefits | 7,500 | 7,842 | |||||||
Other liabilities | 3,484 | 3,286 | |||||||
Total noncurrent liabilities | 33,509 | 33,617 | |||||||
Stockholders' equity | |||||||||
Common stock | 5 | 5 | |||||||
Additional paid-in capital | 6,245 | 7,223 | |||||||
Accumulated other comprehensive loss | (5,112 | ) | (5,083 | ) | |||||
Retained earnings | 2,577 | 1,640 | |||||||
Total stockholders' equity | 3,715 | 3,785 | |||||||
Total liabilities and stockholders’ equity | $ | 53,336 | $ | 51,274 | |||||
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