UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2019
AMERICAN AIRLINES GROUP INC.
AMERICAN AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware | 1-8400 | 75-1825172 | ||
Delaware | 1-2691 | 13-1502798 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
4333 Amon Carter Blvd., Fort Worth, Texas | 76155 | |
4333 Amon Carter Blvd., Fort Worth, Texas | 76155 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code:
(817) 963-1234
(817) 963-1234
N/A | ||
(Former name or former address if changed since last report.) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On April 26, 2019, American Airlines Group Inc. (the “Company”) issued a press release reporting financial results for the three months ended March 31, 2019. The press release is furnished as Exhibit 99.1.
ITEM 7.01. | REGULATION FD DISCLOSURE. |
On April 26, 2019, the Company provided an update for investors presenting information relating to its financial and operational outlook for 2019. This investor update is located on the Company’s website at www.aa.com under “Investor Relations.” The investor update is furnished as Exhibit 99.2.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits. | ||
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN AIRLINES GROUP INC. | |||
Date: April 26, 2019 | By: | /s/ Derek J. Kerr | |
Derek J. Kerr | |||
Executive Vice President and Chief Financial Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, American Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN AIRLINES, INC. | |||
Date: April 26, 2019 | By: | /s/ Derek J. Kerr | |
Derek J. Kerr | |||
Executive Vice President and Chief Financial Officer | |||
Exhibit 99.1
 | ||
Corporate Communications | ||
817-967-1577 | ||
mediarelations@aa.com | ||
FOR RELEASE: Friday, April 26, 2019
AMERICAN AIRLINES GROUP REPORTS
FIRST-QUARTER 2019 PROFIT
FORT WORTH, Texas – American Airlines Group Inc. (NASDAQ: AAL) today reported its first-quarter 2019 results, including these highlights:
• | Reported a first-quarter 2019 pre-tax profit of $245 million, or $314 million excluding net special items1, and a first-quarter net profit of $185 million, or $237 million excluding net special items1 |
• | First-quarter earnings were $0.41 per diluted share, or $0.52 per diluted share excluding net special items1 |
• | Reported record first-quarter revenue of $10.6 billion. Also reported record first-quarter total revenue per available seat mile (TRASM) - the 10th consecutive quarter of TRASM growth |
• | Returned $646 million to shareholders in the form of dividends and share repurchases in the first quarter |
“We want to thank our 130,000 team members for the outstanding job they did to take care of our customers, despite the challenges with our fleet during the quarter. Their hard work led American to record revenue performance under difficult operating conditions,” said Chairman and CEO Doug Parker.
“As we progress toward the busy summer travel period, demand for our product remains strong. However, our near-term earnings forecast has been affected by the grounding of our Boeing 737 MAX fleet, which we have removed from scheduled flying through Aug. 19. We presently estimate the grounding of the 737 MAX will impact our 2019 pre-tax earnings by approximately $350 million. With the recent run-up in oil prices, fuel expenses for the year are also expected to be approximately $650 million higher than we forecast just three months ago.
“Even with these challenges, we expect our 2019 earnings per diluted share excluding net special items2 to grow approximately 10% versus 2018,” Parker continued. “As we look forward to 2020 and beyond, we anticipate that our free cash flow production will increase significantly as our historic fleet replacement program winds down. We are very bullish on our future and focused on creating value for our shareholders.”
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 2
First-Quarter Revenue and Expenses
Pre-tax earnings excluding net special items for the first quarter of 2019 were $314 million, a $149 million decrease from the first quarter of 2018.
GAAP | Non-GAAP1 | ||||||||||||||
1Q19 | 1Q18 | 1Q19 | 1Q18 | ||||||||||||
Operating income ($ mil) | 375 | 396 | 513 | 621 | |||||||||||
Pre-tax income ($ mil) | 245 | 238 | 314 | 463 | |||||||||||
Pre-tax margin | 2.3 | % | 2.3 | % | 3.0 | % | 4.4 | % | |||||||
Net income (loss) ($ mil) | 185 | 159 | 237 | 353 | |||||||||||
Earnings (loss) per diluted share | $ | 0.41 | $ | 0.34 | $ | 0.52 | $ | 0.74 | |||||||
Strong passenger demand drove a 1.8% year-over-year increase in first-quarter 2019 total revenue, to a first-quarter record $10.6 billion. Driven by a record first-quarter total passenger load factor of 82.2%, passenger revenue per available seat mile (PRASM) grew 0.6% to 14.49 cents. Cargo revenue decreased 4% to $218 million due in part to a 9.1% decrease in cargo ton miles. Other revenue was up 1.9% to $708 million due primarily to higher loyalty revenue. First-quarter TRASM increased by 0.5% to a record 15.87 cents on a 1.3% increase in total available seat miles. This marks the 10th consecutive quarter of TRASM growth for American.
Total first-quarter 2019 operating expenses were $10.2 billion, up 2% year-over-year. Total operating cost per available seat mile (CASM) was 15.31 cents in the first quarter of 2019, up 0.7% from first-quarter 2018. Excluding fuel and special items, first-quarter CASM was 11.88 cents, up 2.7% year-over-year, driven primarily by a higher volume of heavy maintenance checks.
Fleet Update
On March 7, the company announced the unplanned removal of 14 737-800 aircraft from service for remediation work following the installation of new aircraft interiors. This resulted in the cancellation of approximately 940 flights in the first quarter. Work on these aircraft has been completed and all aircraft have been returned to service.
In addition, on March 13, the Federal Aviation Administration (FAA) grounded all U.S.-registered 737 MAX aircraft. The American fleet currently includes 24 737 MAX 8 aircraft with an additional 76 aircraft on order. As a result, American canceled approximately 1,200 flights in the first quarter.
In aggregate, the company estimates that these grounded aircraft and associated flight cancellations impacted its first quarter pre-tax income by approximately $80 million.
The company has removed all 737 MAX flying from its flight schedule through Aug. 19, which is approximately 115 flights per day. These flights represent approximately 2% of American’s total capacity each day this summer. Although these aircraft represent a small portion of the company’s total fleet, its financial impact is disproportionate as most of the revenue from the cancellations is lost while the vast majority of the costs remain in place. In total, the company presently expects the 737 MAX cancellations, which are assumed to extend through Aug. 19, to impact its 2019 pre-tax earnings by approximately $350 million.
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 3
Strategic Objectives
American’s success is guided by three strategic objectives: Make culture a competitive advantage, create a world-class customer experience and build American Airlines to thrive forever.
Make Culture a Competitive Advantage
Taking care of team members translates into better customer care. We continue to invest in improved tools, training and support for team members and in the first quarter, American:
• | Opened a new 191,000-square-foot hangar in Chicago (ORD), reopened Tulsa Hangar 2 Dock 2D following its modification to accommodate larger aircraft and announced plans to hire 250 new aviation maintenance technicians (AMTs) this summer. |
• | Hosted more than 5,000 leaders at the airline’s Annual Leadership Conference in Dallas. Team members who oversee people spent a full day learning about American’s mission to care for people on life’s journey. |
• | Accrued $20 million for the company’s profit-sharing program. |
• | Honored 100 team members at the company’s Annual Chairman’s Award celebration in Dallas earlier this month. |
• | Raised $1.4 million for the Cystic Fibrosis Foundation. |
• | Received recognition as a leader among U.S. companies in LGBTQ workplace policies for the 17th year in a row through the airline’s highest rating from the Human Rights Campaign in the 2019 Corporate Equality Index. |
Create a World-Class Customer Experience
American has invested more than $28 billion in its people, product and fleet over the past five years - the largest investment of any carrier in commercial aviation history over this period. In the first quarter, American:
• | Took delivery of 15 new aircraft, including its first two Airbus A321neos, a fuel-efficient aircraft that has power at every seat, larger overhead bins and free wireless entertainment to each customer’s own device, including free live television. |
• | Partnered with Apple Music to offer complimentary Wi-Fi access for customers to stream from their personal Apple Music accounts. Customers with Apple Music subscriptions can access their playlists for free onboard any domestic flight equipped with ViaSat satellite Wi-Fi. |
• | Introduced new partnerships with Blade, offering helicopter transfers in Los Angeles (LAX) and New York (JFK), and The Private Suite at LAX, offering off-terminal entrance and private screening service |
• | Opened a newly renovated Terminal B in Boston (BOS) and a newly renovated Admirals Club in Concourse B in Charlotte (CLT). |
• | Provided AAdvantage members more ways to earn miles with its enhanced relationship with Hyatt Hotels. Through this relationship, elite members in both the AAdvantage and World of Hyatt loyalty programs will be rewarded with more ways to earn points, miles and status on qualifying American flights and stays at Hyatt Hotels. |
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 4
Build American Airlines to Thrive Forever
With a nearly 100-year legacy, American is building a company that we expect to be consistently profitable today and in the future. This long-term initiative was furthered during the quarter as American:
• | Returned $646 million to shareholders through the repurchase of 16.7 million shares and the payment of $46 million in dividends. The company has $1.1 billion remaining of its existing $2 billion share repurchase authorization3. |
• | Expanded the codeshare and began offering reciprocal frequent flyer benefits with China Southern Airlines. |
• | Submitted an application to the U.S. Department of Transportation (DOT) that proposes additional service to Tokyo Haneda (HND) from LAX, Dallas-Fort Worth (DFW) and Las Vegas (LAS). These slots would provide American’s customers better access to downtown Tokyo and to the domestic network of its Pacific Joint Business partner, Japan Airlines. |
• | Announced a planned co-location with British Airways at Terminal 8 at JFK giving customers a unified experience. American and British Airways will invest $344 million in Terminal 8 over the next three years to prepare for the co-location expected in 2022. |
• | Resubmitted an application to the DOT seeking approval of its joint business agreement with LATAM Airlines Group. |
Quarterly Dividend
American declared a dividend of $0.10 per share to be paid on May 22, to stockholders of record as of May 8.
Guidance and Investor Update
American expects its second-quarter 2019 TRASM to be up 1% to 3% year over year. The company also expects its second-quarter 2019 pre-tax margin excluding net special items to be between 7% and 9%2. Based on today’s guidance, American now expects its 2019 diluted earnings per share excluding net special items to be between $4.00 and $6.002.
For additional financial forecasting detail, please refer to the company’s investor update, filed with this release with the SEC on Form 8-K. This filing will be available at aa.com/investorrelations.
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 May 26.
Notes
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.
1. | In the first quarter, the company recognized $69 million in net special items before the effect of income taxes. First-quarter operating special items, consisting of $138 million in net charges, principally included $83 million of fleet restructuring expenses and $37 million of merger integration expenses. The company also recognized nonoperating special items, consisting of $69 million in net credits, principally related to mark-to-market net unrealized gains associated with certain equity investments. |
2. | 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. |
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 5
3. | Share repurchases 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 company is not obligated to repurchase any specific number of shares or continue a dividend in any amount or for any fixed period, and either may be suspended or discontinued at any time at the company's discretion and without prior notice. |
About American Airlines Group
American Airlines and American Eagle offer an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. American is a founding member of the oneworld® alliance, whose members serve more than 1,000 destinations with about 14,250 daily flights to over 150 countries. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL. In 2015, its stock joined the S&P 500 index. Connect with American on Twitter @AmericanAir and at Facebook.com/AmericanAirlines.
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 March 31, 2019 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1A. Risk Factors), and other risks and uncertainties listed from time to time in our other filings with the Securities and Exchange Commission. There may be other factors of which we are not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. We do not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statement.
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 6
American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
3 Months Ended March 31, | Percent Change | |||||||||
2019 | 2018 (1) | |||||||||
Operating revenues: | ||||||||||
Passenger | $ | 9,658 | $ | 9,480 | 1.9 | |||||
Cargo | 218 | 227 | (4.0 | ) | ||||||
Other | 708 | 694 | 1.9 | |||||||
Total operating revenues | 10,584 | 10,401 | 1.8 | |||||||
Operating expenses: | ||||||||||
Aircraft fuel and related taxes | 1,726 | 1,763 | (2.1 | ) | ||||||
Salaries, wages and benefits | 3,090 | 3,017 | 2.5 | |||||||
Regional expenses: | ||||||||||
Fuel | 423 | 398 | 6.1 | |||||||
Other | 1,340 | 1,300 | 3.1 | |||||||
Maintenance, materials and repairs | 561 | 469 | 19.7 | |||||||
Other rent and landing fees | 503 | 467 | 7.8 | |||||||
Aircraft rent | 327 | 309 | 5.4 | |||||||
Selling expenses | 370 | 356 | 3.9 | |||||||
Depreciation and amortization | 480 | 440 | 9.1 | |||||||
Special items, net | 138 | 225 | (38.8 | ) | ||||||
Other | 1,251 | 1,261 | (0.8 | ) | ||||||
Total operating expenses | 10,209 | 10,005 | 2.0 | |||||||
Operating income | 375 | 396 | (5.4 | ) | ||||||
Nonoperating income (expense): | ||||||||||
Interest income | 33 | 25 | 33.9 | |||||||
Interest expense, net | (271 | ) | (262 | ) | 3.2 | |||||
Other income, net | 108 | 79 | 37.0 | |||||||
Total nonoperating expense, net | (130 | ) | (158 | ) | (18.4 | ) | ||||
Income before income taxes | 245 | 238 | 3.2 | |||||||
Income tax provision | 60 | 79 | (23.6 | ) | ||||||
Net income | $ | 185 | $ | 159 | 16.4 | |||||
Earnings per common share: | ||||||||||
Basic | $ | 0.41 | $ | 0.34 | ||||||
Diluted | $ | 0.41 | $ | 0.34 | ||||||
Weighted average shares outstanding (in thousands): | ||||||||||
Basic | 451,951 | 472,297 | ||||||||
Diluted | 453,429 | 474,598 | ||||||||
(1) | In the fourth quarter of 2018, the company adopted Accounting Standards Update (ASU) 2016-02: Leases (Topic 842) (the New Lease Standard) as of January 1, 2018. In accordance with the New Lease Standard, the company has recast its 2018 financial information included herein to reflect the effects of adoption. For additional information, see Note 1(b) to AAG’s Consolidated Financial Statements in Part II, Item 8A of its 2018 Form 10-K filed on February 25, 2019. |
Note: Percent change may not recalculate due to rounding.
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 7
American Airlines Group Inc.
Consolidated Operating Statistics
(Unaudited)
3 Months Ended March 31, | Change | |||||||
2019 | 2018 | |||||||
Mainline | ||||||||
Revenue passenger miles (millions) | 48,481 | 47,007 | 3.1 | % | ||||
Available seat miles (ASM) (millions) | 58,323 | 57,963 | 0.6 | % | ||||
Passenger load factor (percent) | 83.1 | 81.1 | 2.0 | pts | ||||
Passenger enplanements (thousands) | 36,546 | 34,840 | 4.9 | % | ||||
Departures (thousands) | 271 | 263 | 3.0 | % | ||||
Aircraft at end of period | 962 | 952 | 1.1 | % | ||||
Block hours (thousands) | 835 | 831 | 0.6 | % | ||||
Average stage length (miles) | 1,178 | 1,217 | (3.2 | )% | ||||
Fuel consumption (gallons in millions) | 853 | 845 | 0.9 | % | ||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.02 | 2.09 | (3.0 | )% | ||||
Full-time equivalent employees at end of period | 103,500 | 104,400 | (0.9 | )% | ||||
Regional (1) | ||||||||
Revenue passenger miles (millions) | 6,321 | 5,938 | 6.5 | % | ||||
Available seat miles (millions) | 8,351 | 7,860 | 6.2 | % | ||||
Passenger load factor (percent) | 75.7 | 75.5 | 0.2 | pts | ||||
Passenger enplanements (thousands) | 13,389 | 12,786 | 4.7 | % | ||||
Aircraft at end of period | 602 | 587 | 2.6 | % | ||||
Fuel consumption (gallons in millions) | 200 | 185 | 7.7 | % | ||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.12 | 2.15 | (1.4 | )% | ||||
Full-time equivalent employees at end of period (2) | 26,300 | 24,200 | 8.7 | % | ||||
Total Mainline & Regional | ||||||||
Revenue passenger miles (millions) | 54,802 | 52,945 | 3.5 | % | ||||
Available seat miles (millions) | 66,674 | 65,823 | 1.3 | % | ||||
Passenger load factor (percent) | 82.2 | 80.4 | 1.8 | pts | ||||
Yield (cents) | 17.62 | 17.90 | (1.6 | )% | ||||
Passenger revenue per ASM (cents) | 14.49 | 14.40 | 0.6 | % | ||||
Total revenue per ASM (cents) | 15.87 | 15.80 | 0.5 | % | ||||
Cargo ton miles (millions) | 624 | 687 | (9.1 | )% | ||||
Cargo yield per ton mile (cents) | 34.86 | 33.03 | 5.5 | % | ||||
Passenger enplanements (thousands) | 49,935 | 47,626 | 4.8 | % | ||||
Aircraft at end of period | 1,564 | 1,539 | 1.6 | % | ||||
Fuel consumption (gallons in millions) | 1,053 | 1,030 | 2.2 | % | ||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.04 | 2.10 | (2.7 | )% | ||||
Full-time equivalent employees at end of period | 129,800 | 128,600 | 0.9 | % | ||||
Operating cost per ASM (cents) | 15.31 | 15.20 | 0.7 | % | ||||
Operating cost per ASM excluding special items (cents) | 15.11 | 14.86 | 1.7 | % | ||||
Operating cost per ASM excluding special items and fuel (cents) | 11.88 | 11.57 | 2.7 | % | ||||
(1) | Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers. |
(2) | Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries. |
Note: Amounts may not recalculate due to rounding.
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April 26, 2019
Page 8
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
3 Months Ended March 31, | ||||||
2019 | 2018 | Change | ||||
Domestic (1) | ||||||
Revenue passenger miles (millions) | 37,717 | 36,261 | 4.0 | % | ||
Available seat miles (ASM) (millions) | 45,282 | 43,892 | 3.2 | % | ||
Passenger load factor (percent) | 83.3 | 82.6 | 0.7 | pts | ||
Passenger revenue (dollars in millions) | 7,226 | 6,963 | 3.8 | % | ||
Yield (cents) | 19.16 | 19.20 | (0.2 | )% | ||
Passenger revenue per ASM (cents) | 15.96 | 15.86 | 0.6 | % | ||
Latin America (2) | ||||||
Revenue passenger miles (millions) | 8,351 | 8,085 | 3.3 | % | ||
Available seat miles (millions) | 10,208 | 10,239 | (0.3 | )% | ||
Passenger load factor (percent) | 81.8 | 79.0 | 2.8 | pts | ||
Passenger revenue (dollars in millions) | 1,371 | 1,445 | (5.1 | )% | ||
Yield (cents) | 16.42 | 17.87 | (8.1 | )% | ||
Passenger revenue per ASM (cents) | 13.43 | 14.11 | (4.8 | )% | ||
Atlantic | ||||||
Revenue passenger miles (millions) | 5,042 | 4,665 | 8.1 | % | ||
Available seat miles (millions) | 6,825 | 6,746 | 1.2 | % | ||
Passenger load factor (percent) | 73.9 | 69.2 | 4.7 | pts | ||
Passenger revenue (dollars in millions) | 673 | 669 | 0.6 | % | ||
Yield (cents) | 13.35 | 14.34 | (6.9 | )% | ||
Passenger revenue per ASM (cents) | 9.86 | 9.92 | (0.6 | )% | ||
Pacific | ||||||
Revenue passenger miles (millions) | 3,692 | 3,934 | (6.1 | )% | ||
Available seat miles (millions) | 4,359 | 4,946 | (11.9 | )% | ||
Passenger load factor (percent) | 84.7 | 79.5 | 5.2 | pts | ||
Passenger revenue (dollars in millions) | 388 | 403 | (3.8 | )% | ||
Yield (cents) | 10.50 | 10.25 | 2.5 | % | ||
Passenger revenue per ASM (cents) | 8.90 | 8.15 | 9.1 | % | ||
Total International | ||||||
Revenue passenger miles (millions) | 17,085 | 16,684 | 2.4 | % | ||
Available seat miles (millions) | 21,392 | 21,931 | (2.5 | )% | ||
Passenger load factor (percent) | 79.9 | 76.1 | 3.8 | pts | ||
Passenger revenue (dollars in millions) | 2,432 | 2,517 | (3.4 | )% | ||
Yield (cents) | 14.24 | 15.09 | (5.6 | )% | ||
Passenger revenue per ASM (cents) | 11.37 | 11.48 | (0.9 | )% | ||
(1) | Domestic results include Canada, Puerto Rico, and U.S. Virgin Islands. |
(2) | Latin America results include the Caribbean. |
Note: Amounts may not recalculate due to rounding.
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 9
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 condensed 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 measures:
• | 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 understand the company’s core operating performance.
Additionally, the tables below present the reconciliations of total operating costs (GAAP measure) to total operating costs excluding special items and fuel (non-GAAP measure). Management uses 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 understand and analyze the company’s non-fuel costs and core operating performance.
Reconciliation of Pre-Tax Income Excluding Special Items | 3 Months Ended March 31, | Percent Change | ||||||||
2019 | 2018 | |||||||||
(in millions, except per share amounts) | ||||||||||
Pre-tax income as reported | $ | 245 | $ | 238 | ||||||
Pre-tax special items: | ||||||||||
Special items, net (1) | 138 | 225 | ||||||||
Nonoperating special items, net (2) | (69 | ) | — | |||||||
Total pre-tax special items | 69 | 225 | ||||||||
Pre-tax income excluding special items | $ | 314 | $ | 463 | -32% | |||||
Calculation of Pre-Tax Margin | ||||||||||
Pre-tax income as reported | $ | 245 | $ | 238 | ||||||
Total operating revenues as reported | $ | 10,584 | $ | 10,401 | ||||||
Pre-tax margin | 2.3 | % | 2.3 | % | ||||||
Calculation of Pre-Tax Margin Excluding Special Items | ||||||||||
Pre-tax income excluding special items | $ | 314 | $ | 463 | ||||||
Total operating revenues as reported | $ | 10,584 | $ | 10,401 | ||||||
Pre-tax margin excluding special items | 3.0 | % | 4.4 | % | ||||||
Reconciliation of Net Income Excluding Special Items | ||||||||||
Net income as reported | $ | 185 | $ | 159 | ||||||
Special items: | ||||||||||
Total pre-tax special items (1), (2) | 69 | 225 | ||||||||
Income tax special items, net (3) | — | 22 | ||||||||
Net tax effect of special items | (17 | ) | (53 | ) | ||||||
Net income excluding special items | $ | 237 | $ | 353 | -33% | |||||
Reconciliation of Basic and Diluted Earnings Per Share Excluding Special Items | ||||||||||
Net income excluding special items | $ | 237 | $ | 353 | ||||||
Shares used for computation (in thousands): | ||||||||||
Basic | 451,951 | 472,297 | ||||||||
Diluted | 453,429 | 474,598 | ||||||||
Earnings per share excluding special items: | ||||||||||
Basic | $ | 0.53 | $ | 0.75 | ||||||
Diluted | $ | 0.52 | $ | 0.74 | ||||||
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 10
Reconciliation of Operating Income Excluding Special Items | 3 Months Ended March 31, | |||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Operating income as reported | $ | 375 | $ | 396 | ||||
Special items: | ||||||||
Special items, net (1) | 138 | 225 | ||||||
Operating income excluding special items | $ | 513 | $ | 621 | ||||
Reconciliation of Total Operating Cost per ASM Excluding Special Items and Fuel | ||||||||
Total operating expenses as reported | $ | 10,209 | $ | 10,005 | ||||
Special items: | ||||||||
Special items, net (1) | (138 | ) | (225 | ) | ||||
Total operating expenses, excluding special items | 10,071 | 9,780 | ||||||
Fuel: | ||||||||
Aircraft fuel and related taxes - mainline | (1,726 | ) | (1,763 | ) | ||||
Aircraft fuel and related taxes - regional | (423 | ) | (398 | ) | ||||
Total operating expenses, excluding special items and fuel | $ | 7,922 | $ | 7,619 | ||||
(in cents) | ||||||||
Total operating expenses per ASM as reported | 15.31 | 15.20 | ||||||
Special items per ASM: | ||||||||
Special items, net (1) | (0.21 | ) | (0.34 | ) | ||||
Total operating expenses per ASM, excluding special items | 15.11 | 14.86 | ||||||
Fuel per ASM: | ||||||||
Aircraft fuel and related taxes - mainline | (2.59 | ) | (2.68 | ) | ||||
Aircraft fuel and related taxes - regional | (0.63 | ) | (0.60 | ) | ||||
Total operating expenses per ASM, excluding special items and fuel | 11.88 | 11.57 | ||||||
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1) | The 2019 first quarter mainline operating special items principally included $83 million of fleet restructuring expenses and $37 million of merger integration expenses. |
The 2018 first quarter mainline operating special items principally included $112 million of fleet restructuring expenses, $59 million of merger integration expenses and a $40 million litigation settlement.
Fleet restructuring expenses principally included accelerated depreciation and rent expense for aircraft and related equipment grounded or expected to be grounded earlier than planned. Merger integration expenses included costs associated with integration projects, principally the company's technical operations, flight attendant, human resources and payroll systems.
(2) | The 2019 first quarter nonoperating special items principally included mark-to-market net unrealized gains associated with certain equity investments. |
(3) | The 2018 first quarter income tax special items included a $22 million charge to income tax expense to establish a required valuation allowance related to the company's estimated refund for Alternative Minimum Tax credits. |
American Airlines Group Reports First-Quarter 2019 Profit
April 26, 2019
Page 11
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions)
March 31, 2019 | December 31, 2018 (1) | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 337 | $ | 275 | |||
Short-term investments | 4,012 | 4,485 | |||||
Restricted cash and short-term investments | 156 | 154 | |||||
Accounts receivable, net | 1,876 | 1,706 | |||||
Aircraft fuel, spare parts and supplies, net | 1,666 | 1,522 | |||||
Prepaid expenses and other | 607 | 495 | |||||
Total current assets | 8,654 | 8,637 | |||||
Operating property and equipment | |||||||
Flight equipment | 42,013 | 41,499 | |||||
Ground property and equipment | 8,932 | 8,764 | |||||
Equipment purchase deposits | 1,211 | 1,278 | |||||
Total property and equipment, at cost | 52,156 | 51,541 | |||||
Less accumulated depreciation and amortization | (17,746 | ) | (17,443 | ) | |||
Total property and equipment, net | 34,410 | 34,098 | |||||
Operating lease right-of-use assets | 9,124 | 9,151 | |||||
Other assets | |||||||
Goodwill | 4,091 | 4,091 | |||||
Intangibles, net | 2,115 | 2,137 | |||||
Deferred tax asset | 1,007 | 1,145 | |||||
Other assets | 1,386 | 1,321 | |||||
Total other assets | 8,599 | 8,694 | |||||
Total assets | $ | 60,787 | $ | 60,580 | |||
Liabilities and Stockholders’ Equity (Deficit) | |||||||
Current liabilities | |||||||
Current maturities of long-term debt and finance leases | $ | 3,370 | $ | 3,294 | |||
Accounts payable | 2,139 | 1,773 | |||||
Accrued salaries and wages | 1,217 | 1,427 | |||||
Air traffic liability | 5,930 | 4,339 | |||||
Loyalty program liability | 3,354 | 3,267 | |||||
Operating lease liabilities | 1,629 | 1,654 | |||||
Other accrued liabilities | 2,210 | 2,342 | |||||
Total current liabilities | 19,849 | 18,096 | |||||
Noncurrent liabilities | |||||||
Long-term debt and finance leases, net of current maturities | 20,660 | 21,179 | |||||
Pension and postretirement benefits | 6,519 | 6,907 | |||||
Loyalty program liability | 5,214 | 5,272 | |||||
Operating lease liabilities | 7,785 | 7,902 | |||||
Other liabilities | 1,396 | 1,393 | |||||
Total noncurrent liabilities | 41,574 | 42,653 | |||||
Stockholders' equity (deficit) | |||||||
Common stock | 5 | 5 | |||||
Additional paid-in capital | 4,371 | 4,964 | |||||
Accumulated other comprehensive loss | (5,909 | ) | (5,896 | ) | |||
Retained earnings | 897 | 758 | |||||
Total stockholders' deficit | (636 | ) | (169 | ) | |||
Total liabilities and stockholders’ equity (deficit) | $ | 60,787 | $ | 60,580 | |||
(1) | On January 1, 2019, the company adopted ASU 2018-02: Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In accordance with the transition provisions of this new standard, the company has recast its 2018 balance sheet to reflect the effects of adoption. For additional information, see Note 1(b) to AAG’s Condensed Consolidated Financial Statements in Part I, Item 1A of its first quarter 2019 Form 10-Q filed on April 26, 2019. |
Exhibit 99.2
Investor Relations Update
April 26, 2019
General Overview
● | Fleet - On March 13, 2019, the Federal Aviation Administration (FAA) grounded all U.S.-registered Boeing 737 MAX aircraft. The American fleet currently includes 24 Boeing 737 MAX 8 aircraft with an additional 76 aircraft on order. The company has removed all 737 MAX flying from its flight schedule, resulting in the cancellation of approximately 115 flights per day. These flights represent approximately 2% of the company’s daily summer capacity. In total, the company presently expects the 737 MAX cancellations, which are assumed to extend through August 19, to impact its 2019 pre-tax earnings by approximately $350 million. |
● | Capacity - The company now expects its 2019 full year capacity to be up approximately 2.5 percent (gauge up approximately 1.0 percent, departures up approximately 3.5 percent and stage length down approximately 2.0 percent) year-over-year. This reduction from previous guidance is due to the reduction in flying as a result of the grounding of the company’s 737 MAX 8 aircraft. For the second quarter, the company expects system capacity to be up approximately 0.7 percent year-over-year. |
● | Revenue - The company expects its second quarter total revenue per available seat mile (TRASM) to be up approximately 1.0 to 3.0 percent year-over-year. |
● | CASM - The company now expects its 2019 full year consolidated CASM excluding fuel, special items and new labor agreements to be between 2.0 and 3.0 percent year-over-year. The increase from previous guidance is due to the capacity reduction associated with the grounding of the company’s 737 MAX fleet. Consolidated CASM in the second quarter1 is expected to be up approximately 4.5 percent year-over-year driven by the reduction in ASMs referenced above. CASM growth is expected to decelerate to approximately 3.0 percent in the third quarter and further decline to approximately 0.5 percent in the fourth quarter of 2019. The company continues to expect its 2020 CASM excluding fuel, special items and new labor agreements to be up between 1.0 and 2.0 percent year-over-year. |
● | Fuel - Based on the April 18, 2019 forward curve, the company expects to pay an average of between $2.14 and $2.19 per gallon of consolidated jet fuel (including taxes) in the second quarter. Forecasted volume and fuel prices for the remainder of the year are provided on the following page. |
● | Liquidity - As of March 31, 2019, the company had approximately $7.2 billion in total available liquidity, comprised of unrestricted cash and investments of $4.4 billion and $2.8 billion in undrawn revolver capacity. The company also had a restricted cash position of $156 million. |
● | Capital Expenditures - Due to the late delivery of five A321neo aircraft that will now be received in 2020, the company now expects $4.4 billion in capex in 2019, including $2.7 billion in aircraft and $1.7 billion in non-aircraft capex. In 2020, the company expects total capex to decline by $800 million year-over-year with aircraft capex spend of $1.9 billion and non-aircraft capex spend of $1.7 billion. For 2021, total capex is expected to fall by a further $1.4 billion year-over-year. Aircraft capex spend is expected to be $1.0 billion and non-aircraft capex is expected to be $1.2 billion. |
● | Taxes - As of December 31, 2018, the company had approximately $10.2 billion of federal net operating losses (NOLs) and $3.2 billion of state NOLs, substantially all of which are expected to be available in 2019 to reduce future federal and state taxable income. The company expects to recognize a provision for income taxes in 2019 at an effective rate of approximately 24 percent, which will be substantially non-cash. |
● | Pre-tax Margin and EPS - Based on the assumptions outlined above, the company presently expects its second quarter pre-tax margin excluding special items to be approximately 7.0 to 9.0 percent1. Due to the impact of the grounding of the company’s 737 MAX fleet and the increase in fuel expense from previous guidance, the company now expects to report full year 2019 earnings per diluted share excluding special items of between $4.00 and $6.001 down from its previous guidance of $5.50 to $7.50. |
Notes:
1. | The company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of special items cannot be determined at this time. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Financial Update
April 26, 2019
Financial Comments
1Q19 | 2Q19E | 3Q19E | 4Q19E | FY19E2 | ||||||
Consolidated Guidance1 | ||||||||||
Available Seat Miles (ASMs) (bil) | 66.7 | ~73.4 | ~76.7 | ~72.1 | ~288.9 | |||||
Cargo Revenues ($ mil)3 | 218 | ~255 | ~270 | ~270 | ~1,013 | |||||
Other Revenues ($ mil)3 | 708 | ~730 | ~715 | ~700 | ~2,853 | |||||
Average Fuel Price (incl. taxes) ($/gal) (as of 4/18/2019) | 2.04 | 2.14 to 2.19 | 2.19 to 2.24 | 2.17 to 2.22 | 2.13 to 2.18 | |||||
Fuel Gallons Consumed (mil) | 1,053 | ~1,154 | ~1,209 | ~1,124 | ~4,539 | |||||
CASM ex fuel and special items (guidance is YOY % change)4 | 11.88 | +3.5% to +5.5% | +2% to +4% | -0.5% to +1.5% | +2% to +3% | |||||
Interest Income ($ mil) | (33) | ~(38) | ~(36) | ~(32) | ~(139) | |||||
Interest Expense ($ mil) | 271 | ~270 | ~269 | ~253 | ~1,063 | |||||
Other Non-Operating (Income)/Expense ($ mil)5 | (39) | ~(46) | ~(45) | ~(44) | ~(174) | |||||
CAPEX Guidance ($ mil) Inflow/(Outflow) | ||||||||||
Non-Aircraft CAPEX | (528 | ) | ~(391) | ~(391) | ~(391) | ~(1,700) | ||||
Gross Aircraft CAPEX & net PDPs | (777 | ) | ~(769) | ~(567) | ~(620) | ~(2,734) | ||||
Assumed Aircraft Financing | 752 | ~734 | ~564 | ~515 | ~2,565 | |||||
Net Aircraft CAPEX & PDPs2 | (26 | ) | ~(35) | ~(4) | ~(105) | ~(169) | ||||
Notes:
1. | Includes guidance on certain non-GAAP measures, which exclude special items. The company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of special items cannot be determined at this time. Please see the GAAP to non-GAAP reconciliation at the end of this document. |
2. | Numbers may not recalculate due to rounding. |
3. | Cargo/Other revenue includes cargo revenue, loyalty program revenue, and contract services. |
4. | CASM ex fuel and special items is a non-GAAP financial measure. |
5. | Other Non-Operating (Income)/Expense primarily includes non-service related pension and retiree medical benefit income/costs, gains and losses from foreign currency, and income/loss from the company’s approximate 25% ownership interest in Republic Airways Holdings Inc. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Fleet Update
April 26, 2019
Fleet Comments
• | In 2019, the company expects to take delivery of 41 mainline aircraft comprised of 12 A321neo aircraft, 20 B738 MAX aircraft, 2 B789 aircraft and 7 used A319 aircraft. The company also expects to retire 55 mainline aircraft, including 10 B757 aircraft, 9 B763 aircraft, 6 E190 aircraft and 30 MD80 aircraft. |
• | In 2019, the company expects to increase the regional fleet count by a net of 12 aircraft, resulting from the addition of 2 CRJ700 aircraft, 11 CRJ900 aircraft and 20 E175 aircraft, as well as the reduction of 14 CRJ200, 2 CRJ900 aircraft and 5 ERJ140 aircraft. |
Active Mainline Year Ending Fleet Count | Active Regional Year Ending Fleet Count1 | |||||||||||||||||||||||||
2018A | 2019E | 2020E | 2021E | 2018A | 2019E | 2020E | 2021E | |||||||||||||||||||
A319 | 126 | 133 | 133 | 133 | CRJ200 | 35 | 21 | 21 | 21 | |||||||||||||||||
A320 | 48 | 48 | 48 | 44 | CRJ700 | 119 | 121 | 121 | 121 | |||||||||||||||||
A321 | 219 | 219 | 219 | 219 | CRJ900 | 118 | 127 | 131 | 131 | |||||||||||||||||
A321neo | — | 12 | 32 | 50 | E175 | 154 | 174 | 189 | 189 | |||||||||||||||||
A332 | 15 | 15 | 15 | 15 | ERJ140 | 51 | 46 | 34 | 34 | |||||||||||||||||
A333 | 9 | 9 | 9 | 9 | ERJ145 | 118 | 118 | 118 | 118 | |||||||||||||||||
B738 | 304 | 304 | 299 | 276 | 595 | 607 | 614 | 614 | ||||||||||||||||||
B738 MAX | 20 | 40 | 50 | 60 | ||||||||||||||||||||||
B757 | 34 | 24 | 24 | 24 | ||||||||||||||||||||||
B763 | 24 | 15 | 6 | — | ||||||||||||||||||||||
B772 | 47 | 47 | 47 | 47 | ||||||||||||||||||||||
B773 | 20 | 20 | 20 | 20 | ||||||||||||||||||||||
B788 | 20 | 20 | 32 | 42 | ||||||||||||||||||||||
B789 | 20 | 22 | 22 | 22 | ||||||||||||||||||||||
E190 | 20 | 14 | — | — | ||||||||||||||||||||||
MD80 | 30 | — | — | — | ||||||||||||||||||||||
956 | 942 | 956 | 961 | |||||||||||||||||||||||
Notes:
1. | At the end of the first quarter of 2019, the company had 8 ERJ140 regional aircraft in temporary storage, which are not included in the active regional ending fleet count. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Shares Outstanding
April 26, 2019
Shares Outstanding Comments
• | The estimated weighted average shares outstanding for 2019 are listed below. |
• | On April 25, 2018, the company’s Board authorized a new $2.0 billion share repurchase program to expire by the end of 2020, of which $1.1 billion remained available for use as of March 31, 2019. This brings the total amount authorized for share repurchase programs to $13.0 billion since the merger. All previous repurchase programs had been fully expended as of March 31, 2018. |
• | In the first quarter of 2019, the company repurchased 16.7 million shares at a cost of $600 million. Including share repurchases, shares withheld to cover taxes associated with employee equity awards and share distributions, and the cash extinguishment of convertible debt, the company’s share count has dropped 41 percent from 756.1 million shares at merger close to 444 million shares outstanding on March 31, 2019. |
2019 Shares Outstanding (shares mil)1 | ||||||
Shares | ||||||
For Q2 | Basic | Diluted | ||||
Earnings | 445 | 446 | ||||
Net loss | 445 | 445 | ||||
Shares | ||||||
For Q3-Q4 Average | Basic | Diluted | ||||
Earnings | 445 | 446 | ||||
Net loss | 445 | 445 | ||||
Shares | ||||||
For FY 2019 Average | Basic | Diluted | ||||
Earnings | 447 | 448 | ||||
Net loss | 447 | 447 | ||||
Notes:
1. | Shares outstanding are based upon several estimates and assumptions, including average per share stock price and stock award activity and does not assume any future share repurchases. The number of shares in actual calculations of earnings per share will likely be different from those set forth above. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
GAAP to Non-GAAP Reconciliation
April 26, 2019
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 table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding special items and fuel (non-GAAP measure). Management uses 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. Additionally, special items may vary from period-to-period in nature and amount. These adjustments to exclude aircraft fuel and special items allow management an additional tool to understand and analyze the company’s non-fuel costs and core operating performance. Additionally, the table below presents the reconciliation of other non-operating expense (GAAP measure) to other non-operating expense excluding special items (non-GAAP measure). Management uses this non-GAAP financial measure to evaluate the company’s current 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 understand the company’s core operating performance.
American Airlines Group Inc. GAAP to Non-GAAP Reconciliation ($ mil except ASM and CASM data) | |||||||||||||||||||||||||||||||||||
1Q19 | 2Q19 Range | 3Q19 Range | 4Q19 Range | FY19 Range | |||||||||||||||||||||||||||||||
Actual | Low | High | Low | High | Low | High | Low | High | |||||||||||||||||||||||||||
Consolidated1 | |||||||||||||||||||||||||||||||||||
Consolidated operating expenses | $ | 10,209 | $ | 10,697 | $ | 10,914 | $ | 10,941 | $ | 11,164 | $ | 10,560 | $ | 10,779 | $ | 42,435 | $ | 42,929 | |||||||||||||||||
Less fuel expense | 2,149 | 2,470 | 2,527 | 2,648 | 2,708 | 2,439 | 2,495 | 9,705 | 9,880 | ||||||||||||||||||||||||||
Less special items | 138 | — | — | — | — | — | — | 138 | 138 | ||||||||||||||||||||||||||
Consolidated operating expense excluding fuel and special items | 7,922 | 8,227 | 8,386 | 8,293 | 8,455 | 8,121 | 8,284 | 32,591 | 32,911 | ||||||||||||||||||||||||||
Consolidated CASM (cts) | 15.31 | 14.57 | 14.87 | 14.26 | 14.55 | 14.65 | 14.95 | 14.69 | 14.86 | ||||||||||||||||||||||||||
Consolidated CASM excluding fuel and special items (Non-GAAP) (cts) | 11.88 | 11.21 | 11.43 | 10.81 | 11.02 | 11.26 | 11.49 | 11.28 | 11.39 | ||||||||||||||||||||||||||
YOY (%) | 2.7 | % | 3.5 | % | 5.5 | % | 2.0 | % | 4.0 | % | -0.5 | % | 1.5 | % | 2.0 | % | 3.0 | % | |||||||||||||||||
Consolidated ASMs (bil) | 66.7 | 73.4 | 73.4 | 76.7 | 76.7 | 72.1 | 72.1 | 288.9 | 288.9 | ||||||||||||||||||||||||||
Other non-operating (income)/expense1 | |||||||||||||||||||||||||||||||||||
Other non-operating (income)/expense | $ | (108 | ) | $ | (46 | ) | $ | (46 | ) | $ | (45 | ) | $ | (45 | ) | $ | (44 | ) | $ | (44 | ) | $ | (243 | ) | $ | (243 | ) | ||||||||
Less special items | (69 | ) | — | — | — | — | — | — | (69 | ) | (69 | ) | |||||||||||||||||||||||
Other non-operating (income)/expense excluding special items | (39 | ) | (46 | ) | (46 | ) | (45 | ) | (45 | ) | (44 | ) | (44 | ) | (174 | ) | (174 | ) | |||||||||||||||||
Notes: | Amounts may not recalculate due to rounding. |
1. | Certain of the guidance provided excludes special items. The company is unable to fully reconcile such forward-looking guidance to the corresponding GAAP measure because the full nature and amount of the special items cannot be determined at this time. Special items for this period may include, among others, merger integration expenses and fleet restructuring expenses. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Forward Looking Statements
April 26, 2019
Cautionary Statement Regarding Forward-Looking Statements
This document includes forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, 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 future financial and operating results, the company’s plans, objectives, estimates, expectations and intentions, and other statements that are not historical facts. These forward-looking statements are based on the company’s 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 the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (especially in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1A. Risk Factors) and other risks and uncertainties listed from time to time in the company’s other filings with the Securities and Exchange Commission. There may be other factors of which the company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. The company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements.
Please refer to the footnotes and the forward looking statements page of this document for additional information