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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): July 25, 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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		AAL		The Nasdaq Global Select Market

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. ☐

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ITEM 2.02.	RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 25, 2019, American Airlines Group Inc. (the “Company”) issued a press release reporting financial results for the three and six months ended June 30, 2019. The press release is furnished as Exhibit 99.1.

 

ITEM 7.01.	REGULATION FD DISCLOSURE.

On July 25, 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		Press Release, dated July 25, 2019.
99.2		Investor Update, dated July 25, 2019.

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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: July 25, 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: July 25, 2019	By:		/s/ Derek J. Kerr
			Derek J. Kerr
			Executive Vice President and Chief Financial Officer

•	Reported second quarter 2019 pre-tax income of $882 million and net income of $662 million. Excluding net special items, pre-tax income and net income rose more than 5% to $1.1 billion and $810 million,1 respectively.

•	Second quarter earnings were $1.49 per diluted share. Excluding net special items, earnings per share grew 10% year over year to $1.82 per diluted share1.

•	Reported record second quarter revenue of $12 billion. Also reported record second quarter total revenue per available seat mile (TRASM) – the 11th consecutive quarter of TRASM growth.

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•	Continued to evolve American’s fleet by taking delivery of 14 new aircraft and operating its first customer flight on the Airbus A321neo, a fuel-efficient aircraft equipped with power at every seat, larger overhead bins and free wireless entertainment to each customer’s own device, including free live television.

•	Completed a two-year retrofit of Premium Economy, which offers more legroom, wider seats and enhanced meal service on long-haul international flights and select flights to Alaska and Hawaii. American also took the top spot for Premium Economy service in TripAdvisor’s Travelers' Choice Awards, beating all other U.S. carriers.

•	Opened American’s Flagship Lounge and Flagship First Dining in Terminal D at Dallas Fort Worth International Airport (DFW) providing customers with quiet spaces to rest, luxury showers and a high-end, sit-down dining experience.

•	Launched DFW 900, the company’s strategic growth plan that involved the opening of the airline’s new Terminal E Satellite facility with 15 new gates and increased departures at its hub by more than 100 per day.

•	Debuted Bang & Olufsen noise-cancelling headsets for customers in first and business class.

•	The AAdvantage program was named Best Elite Program for the Americas at the Freddie Awards, for the eighth year in a row.

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•	Unveiled the new Great Hall in Terminal B at Boston Logan International Airport (BOS), providing customers with a more comfortable airport experience, local flavor and innovative technology.

•	Recognized American’s Maintenance team through systemwide celebrations on Aviation Maintenance Technician Day and launched the new Ken MacTiernan Excellence in Aviation Maintenance Award.

•	Opened its 29th domestic Line Maintenance station at Houston’s George Bush Intercontinental Airport (IAH).

•	Cut the ribbon on a brand new Terminal 5 ticket counter and break room at Los Angeles International Airport (LAX), the first major milestone toward the completion of the $1.6 billion modernization project for Terminals 4 and 5.

•	Began moving team members to the expanded Robert L. Crandall Campus in Fort Worth, Texas.

•	Named among the Best-of-the-Best Corporations for Inclusion by the National Gay & Lesbian Chamber of Commerce for the fourth year in a row.

•	Contributed $858 million to American’s pension plans, bringing the 2019 contribution total to $1.2 billion – $436 million in excess of the required minimum contribution.

•	Awarded $976,000 in scholarships to 360 children of team members at a ceremony in Dallas as part of the American Airlines Education Foundation scholarship program.

•	Accrued $67 million for the company’s profit-sharing program, bringing the year-to-date accrual to $87 million.

•	Launched 50 new routes, including new service to Dubrovnik, Croatia, and Berlin, Germany.

•	Awarded tentative approval from the U.S. Department of Transportation (DOT) for additional service to Tokyo’s Haneda (HND) from LAX and DFW, providing American’s customers better access to downtown Tokyo and to the domestic network of its Pacific Joint Business partner, Japan Airlines.

•	Received approval from the DOT of its joint business between American and Qantas, allowing for commercial integration between the carriers on routes between the U.S. and Australia and New Zealand.

•	Rolled out new technology initiatives for customers, including pre-paid bag functionality, automation to handle operationally driven overbooked flights and instant buy-up opportunities.

•	Agreed to purchase 50 Airbus A321XLR aircraft, the new longer-range version of the A321neo, with deliveries scheduled to begin in 2023. The agreement includes the conversion of 30 of American’s existing A321neo slots to A321XLRs and the exercise of options for an additional 20 A321XLRs.

•	Announced plans to develop a sixth terminal at DFW that could add up to 24 gates, with the first section of the terminal expected to open as soon as 2025. The plans also include investing in enhancements in Terminal C.

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(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.

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(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.

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(1)	Domestic results include Canada, Puerto Rico, and U.S. Virgin Islands.

(2)	Latin America results include the Caribbean.

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•	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)

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(1)	The 2019 second quarter mainline operating special items principally included $77 million of fleet restructuring expenses and $39 million of merger integration expenses. The 2019 six month period mainline operating special items principally included $160 million of fleet restructuring expenses and $76 million of merger integration expenses.

(2)	The 2019 second quarter nonoperating special items principally included $52 million of mark-to-market net unrealized losses primarily associated with the company's equity investment in China Southern Airlines.

(3)	The 2018 second quarter income tax special items included an $18 million charge related to an international income tax matter. In addition to this charge, the 2018 six month period 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 (AMT) credits.

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(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 second quarter 2019 Form 10-Q filed on July 25, 2019.

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•	On March 13, 2019, the FAA grounded all U.S.-registered Boeing 737 MAX aircraft. We currently have 76 Boeing 737 MAX 8 aircraft on order and the table below reflects the contractual delivery schedule. However, we have not taken delivery of any Boeing 737 MAX 8 aircraft since the grounding, and the timing of future deliveries cannot presently be forecasted.

•	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 45 mainline aircraft, including 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 8 aircraft, resulting from the net addition of 2 CRJ700 aircraft, 7 CRJ900 aircraft and 20 E175 aircraft, as well as the reduction of 16 CRJ200 and 5 ERJ140 aircraft.

•	The company now expects to extend the operating life of some of its A320, B737 and B757 aircraft. These extensions will allow more flexibility in dealing with the grounding of the 737 MAX and the late delivery of some A321neo aircraft, as well as providing modest and efficient growth in the fleet.

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•	The estimated weighted average shares outstanding for 2019 are listed below.

•	On April 25, 2018, the company’s Board authorized a $2.0 billion share repurchase program to expire by the end of 2020, of which $1.1 billion remained available for use as of June 30, 2019. The total amount authorized for share repurchase programs since the merger is $13.0 billion. All previous repurchase programs had been fully expended as of March 31, 2018.

•	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 445 million shares outstanding on June 30, 2019.

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