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): January 23, 2020
(Exact name of registrant as specified in its charter)
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
(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 | ||
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 January 23, 2020, American Airlines Group Inc. (the “Company”) issued a press release reporting financial results for the three and twelve months ended December 31, 2019. The press release is furnished as Exhibit 99.1.
ITEM 7.01. | REGULATION FD DISCLOSURE. |
On January 23, 2020, the Company provided an update for investors presenting information relating to its financial and operational outlook for 2020. 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 | ||
104.1 | Cover page interactive data file (embedded within the Inline XBRL document). | |
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: January 23, 2020 | 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: January 23, 2020 | 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: Thursday, Jan. 23, 2020
AMERICAN AIRLINES GROUP REPORTS
FOURTH-QUARTER AND FULL-YEAR 2019 PROFIT
FORT WORTH, Texas –– American Airlines Group Inc. (NASDAQ: AAL) today reported its fourth-quarter and full-year 2019 financial results, including these highlights:
• | Fourth-quarter 2019 earnings were $0.95 per diluted share. Excluding net special items1, earnings were $1.15 per diluted share, up 19% year over year. |
• | Full-year 2019 earnings were $3.79 per diluted share. Excluding net special items2, earnings were $4.90 per diluted share, up 8% year over year. |
• | Accrued $213 million for the company’s profit-sharing program in 2019, including $74 million in the fourth quarter. |
• | Returned $1.3 billion to shareholders in the form of dividends and share repurchases in 2019. |
“During the fourth quarter, we made important progress to address the issues that impacted our business in 2019, and, thanks to our incredible team, we ended the year with our strongest operational quarter on record,” said American Airlines Chairman and CEO Doug Parker.
“While our results for the quarter reflect this progress, we know there is more work to be done. Looking to 2020, we are focused on three key areas. First, we will continue to deliver operational excellence and build on our strong fourth-quarter results. Our team has done a tremendous job, and we will keep driving improvement in key operational metrics in the year ahead. Second, we will deliver those results while growing where we have a competitive advantage in our most profitable hubs. And third, these initiatives combined with our capital plan will enable us to drive significant free cash flow in 2020 and beyond.”
Fourth-Quarter Revenue and Expenses
Pre-tax earnings were $571 million in the fourth quarter of 2019. Pre-tax earnings excluding net special items for the fourth quarter of 2019 were $679 million, a $90 million increase from the fourth quarter of 2018, or 15.1% year-over-year increase from the same period last year.
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
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GAAP | Non-GAAP1 | GAAP | Non-GAAP2 | ||||||||||||||||||||||||||||
4Q19 | 4Q18 | 4Q19 | 4Q18 | FY19 | FY18 | FY19 | FY18 | ||||||||||||||||||||||||
Operating income ($ mil) | 729 | 571 | 876 | 749 | 3,065 | 2,656 | 3,706 | 3,449 | |||||||||||||||||||||||
Pre-tax income ($ mil) | 571 | 394 | 679 | 589 | 2,256 | 1,884 | 2,900 | 2,790 | |||||||||||||||||||||||
Pre-tax margin | 5.0 | % | 3.6 | % | 6.0 | % | 5.4 | % | 4.9 | % | 4.2 | % | 6.3 | % | 6.3 | % | |||||||||||||||
Net income ($ mil) | 414 | 325 | 502 | 448 | 1,686 | 1,412 | 2,179 | 2,117 | |||||||||||||||||||||||
Earnings per diluted share | $ | 0.95 | $ | 0.70 | $ | 1.15 | $ | 0.97 | $ | 3.79 | $ | 3.03 | $ | 4.90 | $ | 4.55 | |||||||||||||||
Continued strength in passenger demand and a record passenger load factor drove a 3.4% year-over-year increase in fourth-quarter 2019 total revenue to a record $11.3 billion. Driven by a 2.4% increase in passenger load factor, passenger revenue per available seat mile (PRASM) grew 0.9% to 14.72 cents, a record for the fourth quarter. Cargo revenue was down 18.3% to $216 million due primarily to a 15.6% decline in cargo volume. Other revenue was up 5.4% to $750 million due primarily to higher loyalty revenue. Fourth-quarter total revenue per available seat mile (TRASM) increased by 0.5% compared to the fourth quarter of 2018 on a 2.9% increase in total available seat miles.
Total fourth-quarter 2019 operating expenses were $10.6 billion, up 2.1% year over year, driven primarily by higher salaries and benefits, maintenance, and regional expenses. Total fourth-quarter 2019 cost per available seat mile (CASM) was 15.06 cents, down 0.8% from fourth-quarter 2018. Excluding fuel and net special items, consolidated fourth-quarter CASM was 11.59 cents, up 2% year over year.1
2020 Priorities
In 2020, American is focused on operational excellence, efficient and profitable growth, and generating significant free cash flow.
• | Operational excellence: Running a reliable operation is a significant driver of customers’ likelihood to recommend and American’s goal is to become customers’ airline of choice. |
• | Efficient and profitable growth: Grow in high-revenue markets that produce at or above average unit revenues, largely due to new gates in Dallas/Fort Worth and Charlotte, North Carolina. |
• | Generating significant free cash flow3: Use free cash flow to naturally de-lever the company’s balance sheet and return capital to American’s shareholders. |
Operational Excellence
Over the past several months, American’s operational performance has shown significant improvement, including the company’s best-ever performance for both the holiday peak travel period and the entire fourth quarter of 2019. American achieved record results for combined mainline and regional on-time departures, on-time arrivals and completion factor.
“We are very pleased with the trajectory of our operation and are well on our way to delivering operational excellence,” said American Airlines President Robert Isom. “As we look ahead to 2020, we will continue to strengthen our operation and expect to see continued improvements in our reliability metrics.”
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 3
Efficient and Profitable Growth
American is committed to growing its network efficiently and profitably. In 2019, the company added 15 new gates at Dallas Fort Worth International Airport. This growth resulted in a 21% increase in city pairs served and strong unit revenue. The company also added four new gates at Charlotte Douglas International Airport, with plans for three additional gates beginning in 2020. In addition, the company expects to upgauge 14 gates at Ronald Reagan Washington National Airport with dual-class regional jets when the new regional concourse opens in 2021.
Significant Free Cash Flow, Share Repurchases, and Dividends
With American’s historic fleet renewal program winding down, the company’s level of capital investment is expected to decline. The company is committed to generating significant free cash flow for its shareholders in 2020 and beyond and presently expects to generate approximately $6 billion in free cash flow3 over the next two years.
In the fourth quarter of 2019, American returned $285 million to shareholders through the repurchase of 9.9 million shares of common stock and also paid $44 million in dividends. As of Dec. 31, 2019, the company had $565 million remaining of its existing $2 billion share repurchase authorization.4 In aggregate, American has returned more than $13.5 billion to shareholders over the past five years through share repurchases and dividends, including $1.3 billion in 2019.
American declared a dividend of $0.10 per share to be paid Feb. 19, 2020, to stockholders of record as of Feb. 5, 2020.
Fleet Update
On March 13, 2019, a directive from the Federal Aviation Administration grounded all U.S.-registered Boeing 737 MAX aircraft. American’s fleet currently includes 24 MAX aircraft with an additional 76 aircraft on order. As a result of this directive, American canceled approximately 10,000 flights in the fourth quarter of 2019.
The company has removed all MAX flying from its flight schedule through June 3, 2020, and will continue to assess this timeline.
Guidance and Investor Update
American expects its first-quarter 2020 pre-tax margin excluding net special items to be approximately flat year over year.5 Based on today’s guidance, the company expects its 2020 diluted earnings per share excluding net special items to be between $4.00 and $6.00.5
For additional financial forecasting detail, please refer to the company’s investor update, furnished 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 Feb. 23.
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 fourth quarter of 2019, the company recognized $108 million in net special items before the effect of income taxes. The 2019 fourth quarter mainline operating special items, net principally included $85 million of merger integration expenses and $39 million of fleet restructuring expenses. |
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 4
These were partially offset by nonoperating net special items of $39 million primarily related to mark-to-market net unrealized gains associated with certain equity and other investments.
2. | For the full year 2019, the company recognized $644 million in net special items before the effect of income taxes. Total operating special items totaled a net charge of $641 million, which principally included $271 million of fleet restructuring expenses, a $213 million non-cash impairment charge principally related to the planned retirement of the company's Embraer E190 fleet, and $191 million of merger integration expenses, offset in part by a $53 million credit to reduce certain litigation reserves. The company also recognized $3 million of nonoperating net special items. |
3. | Free cash flow is defined as operating cash flow minus total capital expenditures plus proceeds from sale-leaseback transactions. |
4. | Share repurchases under the company’s repurchase programs 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 that may be made from time to time will be 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 and its repurchase of AAG common stock may be limited, suspended or discontinued at any time at its discretion and without prior notice. |
5. | 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. |
About American Airlines Group
American Airlines offers customers 6,800 daily flights to more than 365 destinations in 61 countries from its hubs in Charlotte, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. With a shared purpose of caring for people on life's journey, American's 130,000 global team members serve more than 200 million customers annually. Since 2013, American has invested more than $30 billion in its product and people and now flies the youngest fleet among U.S. network carriers, equipped with industry-leading high-speed Wi-Fi, lie-flat seats, and more inflight entertainment and access to power. American also has enhanced food and beverage options in the air and on the ground in its world-class Admirals Club and Flagship lounges. American was recently named a Five Star Global Airline by the Airline Passenger Experience Association and Airline of the Year by Air Transport World. American is a founding member of oneworld®, whose members serve 1,100 destinations in 180 countries and territories. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL and the company's stock is included in the S&P 500. Learn more about what's happening at American by visiting news.aa.com and connect with American on Twitter @AmericanAir and at Facebook.com/AmericanAirlines.
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 5
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 September 30, 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 Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 6
American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
3 Months Ended December 31, | Percent Change | 12 Months Ended December 31, | Percent Change | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Operating revenues: | |||||||||||||||||||||
Passenger | $ | 10,347 | $ | 9,962 | 3.9 | $ | 42,010 | $ | 40,676 | 3.3 | |||||||||||
Cargo | 216 | 264 | (18.3 | ) | 863 | 1,013 | (14.8 | ) | |||||||||||||
Other | 750 | 712 | 5.4 | 2,895 | 2,852 | 1.5 | |||||||||||||||
Total operating revenues | 11,313 | 10,938 | 3.4 | 45,768 | 44,541 | 2.8 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||
Aircraft fuel and related taxes | 1,816 | 1,953 | (7.0 | ) | 7,526 | 8,053 | (6.5 | ) | |||||||||||||
Salaries, wages and benefits | 3,100 | 3,007 | 3.0 | 12,609 | 12,251 | 2.9 | |||||||||||||||
Regional expenses: | |||||||||||||||||||||
Fuel | 475 | 474 | 0.2 | 1,869 | 1,843 | 1.4 | |||||||||||||||
Depreciation and amortization | 90 | 77 | 15.9 | 336 | 318 | 5.5 | |||||||||||||||
Other | 1,355 | 1,259 | 7.7 | 5,296 | 4,972 | 6.5 | |||||||||||||||
Maintenance, materials and repairs | 635 | 550 | 15.3 | 2,380 | 2,050 | 16.1 | |||||||||||||||
Other rent and landing fees | 487 | 437 | 11.6 | 2,055 | 1,900 | 8.2 | |||||||||||||||
Aircraft rent | 330 | 326 | 1.4 | 1,326 | 1,264 | 4.9 | |||||||||||||||
Selling expenses | 407 | 383 | 6.2 | 1,602 | 1,520 | 5.4 | |||||||||||||||
Depreciation and amortization | 513 | 474 | 8.4 | 1,982 | 1,839 | 7.7 | |||||||||||||||
Special items, net | 147 | 173 | (14.5 | ) | 635 | 787 | (19.4 | ) | |||||||||||||
Other | 1,229 | 1,254 | (2.0 | ) | 5,087 | 5,088 | — | ||||||||||||||
Total operating expenses | 10,584 | 10,367 | 2.1 | 42,703 | 41,885 | 2.0 | |||||||||||||||
Operating income | 729 | 571 | 27.6 | 3,065 | 2,656 | 15.4 | |||||||||||||||
Nonoperating income (expense): | |||||||||||||||||||||
Interest income | 24 | 34 | (29.4 | ) | 127 | 118 | 7.1 | ||||||||||||||
Interest expense, net | (265 | ) | (270 | ) | (1.0 | ) | (1,095 | ) | (1,056 | ) | 3.7 | ||||||||||
Other income, net | 83 | 59 | 43.5 | 159 | 166 | (3.8 | ) | ||||||||||||||
Total nonoperating expense, net | (158 | ) | (177 | ) | (10.2 | ) | (809 | ) | (772 | ) | 4.8 | ||||||||||
Income before income taxes | 571 | 394 | 44.4 | 2,256 | 1,884 | 19.7 | |||||||||||||||
Income tax provision | 157 | 69 | nm | 570 | 472 | 20.7 | |||||||||||||||
Net income | $ | 414 | $ | 325 | 27.5 | $ | 1,686 | $ | 1,412 | 19.4 | |||||||||||
Earnings per common share: | |||||||||||||||||||||
Basic | $ | 0.95 | $ | 0.71 | $ | 3.80 | $ | 3.04 | |||||||||||||
Diluted | $ | 0.95 | $ | 0.70 | $ | 3.79 | $ | 3.03 | |||||||||||||
Weighted average shares outstanding (in thousands): | |||||||||||||||||||||
Basic | 434,578 | 460,589 | 443,363 | 464,236 | |||||||||||||||||
Diluted | 435,659 | 461,915 | 444,269 | 465,660 | |||||||||||||||||
Note: Percent change may not recalculate due to rounding.
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 7
American Airlines Group Inc.
Consolidated Operating Statistics
(Unaudited)
3 Months Ended December 31, | Change | 12 Months Ended December 31, | Change | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Mainline | |||||||||||||||||
Revenue passenger miles (millions) | 51,675 | 49,143 | 5.2 | % | 212,859 | 205,451 | 3.6 | % | |||||||||
Available seat miles (ASM) (millions) | 60,985 | 59,852 | 1.9 | % | 248,833 | 248,562 | 0.1 | % | |||||||||
Passenger load factor (percent) | 84.7 | 82.1 | 2.6 | pts | 85.5 | 82.7 | 2.8 | pts | |||||||||
Passenger enplanements (thousands) | 38,757 | 36,581 | 5.9 | % | 155,821 | 148,228 | 5.1 | % | |||||||||
Departures (thousands) | 279 | 273 | 2.3 | % | 1,115 | 1,098 | 1.6 | % | |||||||||
Aircraft at end of period | 942 | 956 | (1.5 | )% | 942 | 956 | (1.5 | )% | |||||||||
Block hours (thousands) | 847 | 846 | 0.1 | % | 3,456 | 3,493 | (1.1 | )% | |||||||||
Average stage length (miles) | 1,177 | 1,198 | (1.8 | )% | 1,202 | 1,236 | (2.7 | )% | |||||||||
Fuel consumption (gallons in millions) | 895 | 877 | 2.0 | % | 3,667 | 3,644 | 0.6 | % | |||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.03 | 2.23 | (8.9 | )% | 2.05 | 2.21 | (7.1 | )% | |||||||||
Full-time equivalent employees at end of period | 104,200 | 102,900 | 1.3 | % | 104,200 | 102,900 | 1.3 | % | |||||||||
Regional (1) | |||||||||||||||||
Revenue passenger miles (millions) | 7,242 | 6,427 | 12.7 | % | 28,393 | 25,709 | 10.4 | % | |||||||||
Available seat miles (millions) | 9,287 | 8,446 | 10.0 | % | 36,255 | 33,492 | 8.3 | % | |||||||||
Passenger load factor (percent) | 78.0 | 76.1 | 1.9 | pts | 78.3 | 76.8 | 1.5 | pts | |||||||||
Passenger enplanements (thousands) | 15,096 | 13,902 | 8.6 | % | 59,361 | 55,517 | 6.9 | % | |||||||||
Aircraft at end of period | 605 | 595 | 1.7 | % | 605 | 595 | 1.7 | % | |||||||||
Fuel consumption (gallons in millions) | 222 | 203 | 9.3 | % | 870 | 803 | 8.3 | % | |||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.14 | 2.34 | (8.4 | )% | 2.15 | 2.30 | (6.4 | )% | |||||||||
Full-time equivalent employees at end of period (2) | 29,500 | 26,000 | 13.5 | % | 29,500 | 26,000 | 13.5 | % | |||||||||
Total Mainline & Regional | |||||||||||||||||
Revenue passenger miles (millions) | 58,917 | 55,570 | 6.0 | % | 241,252 | 231,160 | 4.4 | % | |||||||||
Available seat miles (millions) | 70,272 | 68,298 | 2.9 | % | 285,088 | 282,054 | 1.1 | % | |||||||||
Passenger load factor (percent) | 83.8 | 81.4 | 2.4 | pts | 84.6 | 82.0 | 2.6 | pts | |||||||||
Yield (cents) | 17.56 | 17.93 | (2.0 | )% | 17.41 | 17.60 | (1.0 | )% | |||||||||
Passenger revenue per ASM (cents) | 14.72 | 14.59 | 0.9 | % | 14.74 | 14.42 | 2.2 | % | |||||||||
Total revenue per ASM (cents) | 16.10 | 16.02 | 0.5 | % | 16.05 | 15.79 | 1.7 | % | |||||||||
Cargo ton miles (millions) | 599 | 710 | (15.6 | )% | 2,489 | 2,908 | (14.4 | )% | |||||||||
Cargo yield per ton mile (cents) | 36.03 | 37.25 | (3.3 | )% | 34.67 | 34.81 | (0.4 | )% | |||||||||
Passenger enplanements (thousands) | 53,853 | 50,483 | 6.7 | % | 215,182 | 203,745 | 5.6 | % | |||||||||
Aircraft at end of period (3) | 1,547 | 1,551 | (0.3 | )% | 1,547 | 1,551 | (0.3 | )% | |||||||||
Fuel consumption (gallons in millions) | 1,117 | 1,080 | 3.4 | % | 4,537 | 4,447 | 2.0 | % | |||||||||
Average aircraft fuel price including related taxes (dollars per gallon) | 2.05 | 2.25 | (8.7 | )% | 2.07 | 2.23 | (6.9 | )% | |||||||||
Full-time equivalent employees at end of period | 133,700 | 128,900 | 3.7 | % | 133,700 | 128,900 | 3.7 | % | |||||||||
Operating cost per ASM (cents) | 15.06 | 15.18 | (0.8 | )% | 14.98 | 14.85 | 0.9 | % | |||||||||
Operating cost per ASM excluding net special items (cents) | 14.85 | 14.92 | (0.5 | )% | 14.75 | 14.57 | 1.3 | % | |||||||||
Operating cost per ASM excluding net special items and fuel (cents) | 11.59 | 11.37 | 2.0 | % | 11.46 | 11.06 | 3.6 | % | |||||||||
(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. |
(3) | Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes 12 Embraer 140 regional aircraft that are in temporary storage. |
Note: Amounts may not recalculate due to rounding.
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 8
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
3 Months Ended December 31, | 12 Months Ended December 31, | ||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||
Domestic (1) | |||||||||||||
Revenue passenger miles (millions) | 40,436 | 38,096 | 6.1 | % | 161,580 | 154,746 | 4.4 | % | |||||
Available seat miles (ASM) (millions) | 48,068 | 45,932 | 4.7 | % | 189,221 | 184,901 | 2.3 | % | |||||
Passenger load factor (percent) | 84.1 | 82.9 | 1.2 | pts | 85.4 | 83.7 | 1.7 | pts | |||||
Passenger revenue (dollars in millions) | 7,833 | 7,502 | 4.4 | % | 30,881 | 29,573 | 4.4 | % | |||||
Yield (cents) | 19.37 | 19.69 | (1.6 | )% | 19.11 | 19.11 | — | ||||||
Passenger revenue per ASM (cents) | 16.30 | 16.33 | (0.2 | )% | 16.32 | 15.99 | 2.0 | % | |||||
Latin America (2) | |||||||||||||
Revenue passenger miles (millions) | 7,235 | 7,229 | 0.1 | % | 31,029 | 30,628 | 1.3 | % | |||||
Available seat miles (millions) | 8,476 | 9,085 | (6.7 | )% | 36,653 | 38,493 | (4.8 | )% | |||||
Passenger load factor (percent) | 85.4 | 79.6 | 5.8 | pts | 84.7 | 79.6 | 5.1 | pts | |||||
Passenger revenue (dollars in millions) | 1,218 | 1,186 | 2.6 | % | 5,047 | 5,125 | (1.5 | )% | |||||
Yield (cents) | 16.83 | 16.41 | 2.6 | % | 16.27 | 16.73 | (2.8 | )% | |||||
Passenger revenue per ASM (cents) | 14.37 | 13.06 | 10.0 | % | 13.77 | 13.31 | 3.4 | % | |||||
Atlantic | |||||||||||||
Revenue passenger miles (millions) | 7,639 | 6,652 | 14.8 | % | 34,152 | 30,282 | 12.8 | % | |||||
Available seat miles (millions) | 9,372 | 8,624 | 8.7 | % | 42,010 | 39,178 | 7.2 | % | |||||
Passenger load factor (percent) | 81.5 | 77.1 | 4.4 | pts | 81.3 | 77.3 | 4.0 | pts | |||||
Passenger revenue (dollars in millions) | 947 | 905 | 4.6 | % | 4,624 | 4,376 | 5.7 | % | |||||
Yield (cents) | 12.40 | 13.61 | (8.9 | )% | 13.54 | 14.45 | (6.3 | )% | |||||
Passenger revenue per ASM (cents) | 10.11 | 10.50 | (3.7 | )% | 11.01 | 11.17 | (1.5 | )% | |||||
Pacific | |||||||||||||
Revenue passenger miles (millions) | 3,607 | 3,593 | 0.4 | % | 14,491 | 15,504 | (6.5 | )% | |||||
Available seat miles (millions) | 4,356 | 4,657 | (6.5 | )% | 17,204 | 19,482 | (11.7 | )% | |||||
Passenger load factor (percent) | 82.8 | 77.1 | 5.7 | pts | 84.2 | 79.6 | 4.6 | pts | |||||
Passenger revenue (dollars in millions) | 349 | 369 | (5.3 | )% | 1,458 | 1,602 | (9.0 | )% | |||||
Yield (cents) | 9.68 | 10.26 | (5.7 | )% | 10.06 | 10.33 | (2.6 | )% | |||||
Passenger revenue per ASM (cents) | 8.02 | 7.92 | 1.3 | % | 8.47 | 8.22 | 3.1 | % | |||||
Total International | |||||||||||||
Revenue passenger miles (millions) | 18,481 | 17,474 | 5.8 | % | 79,672 | 76,414 | 4.3 | % | |||||
Available seat miles (millions) | 22,204 | 22,366 | (0.7 | )% | 95,867 | 97,153 | (1.3 | )% | |||||
Passenger load factor (percent) | 83.2 | 78.1 | 5.1 | pts | 83.1 | 78.7 | 4.4 | pts | |||||
Passenger revenue (dollars in millions) | 2,514 | 2,460 | 2.2 | % | 11,129 | 11,103 | 0.2 | % | |||||
Yield (cents) | 13.60 | 14.08 | (3.4 | )% | 13.97 | 14.53 | (3.9 | )% | |||||
Passenger revenue per ASM (cents) | 11.32 | 11.00 | 2.9 | % | 11.61 | 11.43 | 1.6 | % | |||||
(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 Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
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 Net Special Items (non-GAAP measure) |
• | Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure) |
• | Net Income (GAAP measure) to Net Income Excluding Net Special Items (non-GAAP measure) |
• | Basic and Diluted Earnings Per Share (GAAP measure) to Basic and Diluted Earnings Per Share Excluding Net Special Items (non-GAAP measure) |
• | Operating Income (GAAP measure) to Operating Income Excluding Net 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 net special items may vary from period-to-period in nature and amount, the adjustment to exclude net 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 net special items and fuel (non-GAAP measure). Management uses total operating costs excluding net 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 net 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 Net Special Items | 3 Months Ended December 31, | Percent Change | 12 Months Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||
(in millions, except per share amounts) | (in millions, except per share amounts) | |||||||||||||||||||
Pre-tax income as reported | $ | 571 | $ | 394 | $ | 2,256 | $ | 1,884 | ||||||||||||
Pre-tax net special items: | ||||||||||||||||||||
Mainline operating special items, net (1) | 147 | 173 | 635 | 787 | ||||||||||||||||
Regional operating special items, net | — | 5 | 6 | 6 | ||||||||||||||||
Nonoperating special items, net (2) | (39 | ) | 17 | 3 | 113 | |||||||||||||||
Total pre-tax net special items | 108 | 195 | 644 | 906 | ||||||||||||||||
Pre-tax income excluding net special items | $ | 679 | $ | 589 | 15.1% | $ | 2,900 | $ | 2,790 | 3.9% | ||||||||||
Calculation of Pre-Tax Margin | ||||||||||||||||||||
Pre-tax income as reported | $ | 571 | $ | 394 | $ | 2,256 | $ | 1,884 | ||||||||||||
Total operating revenues as reported | $ | 11,313 | $ | 10,938 | $ | 45,768 | $ | 44,541 | ||||||||||||
Pre-tax margin | 5.0 | % | 3.6 | % | 4.9 | % | 4.2 | % | ||||||||||||
Calculation of Pre-Tax Margin Excluding Net Special Items | ||||||||||||||||||||
Pre-tax income excluding net special items | $ | 679 | $ | 589 | $ | 2,900 | $ | 2,790 | ||||||||||||
Total operating revenues as reported | $ | 11,313 | $ | 10,938 | $ | 45,768 | $ | 44,541 | ||||||||||||
Pre-tax margin excluding net special items | 6.0 | % | 5.4 | % | 6.3 | % | 6.3 | % | ||||||||||||
Reconciliation of Net Income Excluding Net Special Items | ||||||||||||||||||||
Net income as reported | $ | 414 | $ | 325 | $ | 1,686 | $ | 1,412 | ||||||||||||
Net special items: | ||||||||||||||||||||
Total pre-tax net special items (1), (2) | 108 | 195 | 644 | 906 | ||||||||||||||||
Income tax special items, net (3) | — | (22 | ) | — | 18 | |||||||||||||||
Net tax effect of net special items | (20 | ) | (50 | ) | (151 | ) | (219 | ) | ||||||||||||
Net income excluding net special items | $ | 502 | $ | 448 | 12.2% | $ | 2,179 | $ | 2,117 | 2.9% | ||||||||||
Reconciliation of Basic and Diluted Earnings Per Share Excluding Net Special Items | ||||||||||||||||||||
Net income excluding net special items | $ | 502 | $ | 448 | $ | 2,179 | $ | 2,117 | ||||||||||||
Shares used for computation (in thousands): | ||||||||||||||||||||
Basic | 434,578 | 460,589 | 443,363 | 464,236 | ||||||||||||||||
Diluted | 435,659 | 461,915 | 444,269 | 465,660 | ||||||||||||||||
Earnings per share excluding net special items: | ||||||||||||||||||||
Basic | $ | 1.15 | $ | 0.97 | $ | 4.91 | $ | 4.56 | ||||||||||||
Diluted | $ | 1.15 | $ | 0.97 | $ | 4.90 | $ | 4.55 | ||||||||||||
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 10
Reconciliation of Operating Income Excluding Net Special Items | 3 Months Ended December 31, | 12 Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Operating income as reported | $ | 729 | $ | 571 | $ | 3,065 | $ | 2,656 | ||||||||
Operating net special items: | ||||||||||||||||
Mainline operating special items, net (1) | 147 | 173 | 635 | 787 | ||||||||||||
Regional operating special items, net | — | 5 | 6 | 6 | ||||||||||||
Operating income excluding net special items | $ | 876 | $ | 749 | $ | 3,706 | $ | 3,449 | ||||||||
Reconciliation of Total Operating Cost per ASM Excluding Net Special Items and Fuel | ||||||||||||||||
Total operating expenses as reported | $ | 10,584 | $ | 10,367 | $ | 42,703 | $ | 41,885 | ||||||||
Operating net special items: | ||||||||||||||||
Mainline operating special items, net (1) | (147 | ) | (173 | ) | (635 | ) | (787 | ) | ||||||||
Regional operating special items, net | — | (5 | ) | (6 | ) | (6 | ) | |||||||||
Total operating expenses, excluding net special items | 10,437 | 10,189 | 42,062 | 41,092 | ||||||||||||
Fuel: | ||||||||||||||||
Aircraft fuel and related taxes - mainline | (1,816 | ) | (1,953 | ) | (7,526 | ) | (8,053 | ) | ||||||||
Aircraft fuel and related taxes - regional | (475 | ) | (474 | ) | (1,869 | ) | (1,843 | ) | ||||||||
Total operating expenses, excluding net special items and fuel | $ | 8,146 | $ | 7,762 | $ | 32,667 | $ | 31,196 | ||||||||
(in cents) | (in cents) | |||||||||||||||
Total operating expenses per ASM as reported | 15.06 | 15.18 | 14.98 | 14.85 | ||||||||||||
Operating net special items per ASM: | ||||||||||||||||
Mainline operating special items, net (1) | (0.21 | ) | (0.25 | ) | (0.22 | ) | (0.28 | ) | ||||||||
Regional operating special items, net | — | (0.01 | ) | — | — | |||||||||||
Total operating expenses per ASM, excluding net special items | 14.85 | 14.92 | 14.75 | 14.57 | ||||||||||||
Fuel per ASM: | ||||||||||||||||
Aircraft fuel and related taxes - mainline | (2.58 | ) | (2.86 | ) | (2.64 | ) | (2.86 | ) | ||||||||
Aircraft fuel and related taxes - regional | (0.68 | ) | (0.69 | ) | (0.66 | ) | (0.65 | ) | ||||||||
Total operating expenses per ASM, excluding net special items and fuel | 11.59 | 11.37 | 11.46 | 11.06 | ||||||||||||
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1) | The 2019 fourth quarter mainline operating special items, net principally included $85 million of merger integration expenses and $39 million of fleet restructuring expenses. The 2019 twelve month period mainline operating special items, net principally included $271 million of fleet restructuring expenses, a $213 million non-cash impairment charge principally related to the planned retirement of the company's Embraer E190 fleet and $191 million of merger integration expenses, offset in part by a $53 million credit to reduce certain litigation reserves. |
The 2018 fourth quarter mainline operating special items, net principally included $94 million of fleet restructuring expenses, $81 million of merger integration expenses, $37 million in severance costs associated with reductions of management and support staff team members, offset in part by a $37 million net credit resulting from mark-to-market adjustments on bankruptcy obligations. The 2018 twelve month period mainline operating special items, net principally included $422 million of fleet restructuring expenses, $268 million of merger integration expenses, $58 million in severance costs as described above, a $45 million litigation settlement, a $26 million non-cash charge to write off the company's Brazil route authority intangible asset as a result of the U.S.-Brazil open skies agreement, offset in part by a $76 million net credit resulting from mark-to-market adjustments on bankruptcy obligations.
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) | Principally included mark-to-market net unrealized gains and losses associated with certain equity and other investments. |
(3) | The 2018 fourth quarter income tax special credit of $22 million was the result of the reversal of the valuation allowance previously recognized in the 2018 first quarter related to the company's estimated refund for Alternative Minimum Tax (AMT) credits, which was no longer subject to sequestration. The 2018 twelve month period income tax special charge of $18 million is related to an international income tax matter. |
American Airlines Group Reports Fourth-Quarter and Full-Year 2019 Profit
January 23, 2020
Page 11
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions)
December 31, 2019 | December 31, 2018 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets | |||||||
Cash | $ | 280 | $ | 275 | |||
Short-term investments | 3,546 | 4,485 | |||||
Restricted cash and short-term investments | 158 | 154 | |||||
Accounts receivable, net | 1,750 | 1,706 | |||||
Aircraft fuel, spare parts and supplies, net | 1,851 | 1,522 | |||||
Prepaid expenses and other | 621 | 495 | |||||
Total current assets | 8,206 | 8,637 | |||||
Operating property and equipment | |||||||
Flight equipment | 42,537 | 41,499 | |||||
Ground property and equipment | 9,443 | 8,764 | |||||
Equipment purchase deposits | 1,674 | 1,278 | |||||
Total property and equipment, at cost | 53,654 | 51,541 | |||||
Less accumulated depreciation and amortization | (18,659 | ) | (17,443 | ) | |||
Total property and equipment, net | 34,995 | 34,098 | |||||
Operating lease right-of-use assets | 8,737 | 9,151 | |||||
Other assets | |||||||
Goodwill | 4,091 | 4,091 | |||||
Intangibles, net | 2,084 | 2,137 | |||||
Deferred tax asset | 645 | 1,145 | |||||
Other assets | 1,237 | 1,321 | |||||
Total other assets | 8,057 | 8,694 | |||||
Total assets | $ | 59,995 | $ | 60,580 | |||
Liabilities and Stockholders’ Equity (Deficit) | |||||||
Current liabilities | |||||||
Current maturities of long-term debt and finance leases | $ | 2,861 | $ | 3,294 | |||
Accounts payable | 2,062 | 1,773 | |||||
Accrued salaries and wages | 1,541 | 1,427 | |||||
Air traffic liability | 4,808 | 4,339 | |||||
Loyalty program liability | 3,193 | 3,267 | |||||
Operating lease liabilities | 1,708 | 1,654 | |||||
Other accrued liabilities | 2,138 | 2,342 | |||||
Total current liabilities | 18,311 | 18,096 | |||||
Noncurrent liabilities | |||||||
Long-term debt and finance leases, net of current maturities | 21,454 | 21,179 | |||||
Pension and postretirement benefits | 6,052 | 6,907 | |||||
Loyalty program liability | 5,422 | 5,272 | |||||
Operating lease liabilities | 7,421 | 7,902 | |||||
Other liabilities | 1,453 | 1,393 | |||||
Total noncurrent liabilities | 41,802 | 42,653 | |||||
Stockholders' equity (deficit) | |||||||
Common stock | 4 | 5 | |||||
Additional paid-in capital | 3,945 | 4,964 | |||||
Accumulated other comprehensive loss | (6,331 | ) | (5,896 | ) | |||
Retained earnings | 2,264 | 758 | |||||
Total stockholders' deficit | (118 | ) | (169 | ) | |||
Total liabilities and stockholders’ equity (deficit) | $ | 59,995 | $ | 60,580 | |||
Exhibit 99.2
Investor Relations Update
January 23, 2020
General Overview
● | Fleet and Operation - On March 13, 2019, a directive from the Federal Aviation Administration (FAA) grounded all U.S.-registered Boeing 737 MAX aircraft. The American Airlines fleet currently includes 24 Boeing 737 MAX 8 aircraft with an additional 76 aircraft on order. As previously disclosed, the company has now cancelled all 737 MAX 8 flying through June 3, 2020 and will continue to assess this timeline. As previously disclosed, the company reached a confidential agreement with Boeing on compensation for financial damages incurred in 2019 due to the grounding of the 737 MAX 8 aircraft. The company anticipates accounting for substantially all of the compensation as a reduction in cost basis of grounded MAX aircraft and certain future MAX aircraft deliveries. |
● | Capacity - The company expects its first quarter capacity to be up approximately 2.5 percent and full year capacity to be up between 4 to 5 percent year-over-year. |
● | Revenue - The company expects its first quarter total revenue per available seat mile (TRASM) to be flat to up 2 percent year-over-year. |
● | CASM1 - The company expects its first quarter total cost per available seat mile excluding fuel, net special items and new labor agreements (CASM)2 to be up 2 to 4 percent year-over-year. |
● | Fuel - Based on the January 21, 2020 forward curve, the company expects to pay an average of between $2.00 and $2.05 per gallon of total jet fuel (including taxes) in the first quarter. |
● | Liquidity - As of December 31, 2019, the company had approximately $7.0 billion in total available liquidity. The company’s total liquidity is comprised of unrestricted cash and investments of $3.8 billion and $3.2 billion in undrawn revolver capacity. The company also had a restricted cash position of $158 million. |
● | Capital Expenditures - For 2020, the company expects to invest $3.3 billion in capex, including $1.6 billion of aircraft and $1.7 billion in non-aircraft capex. For 2021, total capex is expected to be $2.0 billion, including $0.8 billion for aircraft and $1.2 billion for non-aircraft capex. |
● | Free Cash Flow3 - The Company expects to generate approximately $6 billion of free cash flow between 2020 and 2021. |
● | Taxes - As of December 31, 2019, the company had approximately $9.1 billion of federal net operating losses (NOLs) and $3.0 billion of state NOLs, substantially all of which are expected to be available in 2020 to reduce future federal and state taxable income. The company expects to recognize a provision for income taxes in 2020 at an effective rate of approximately 25 percent, which will be substantially non-cash. |
● | Pre-tax Margin and EPS - Based on the assumptions outlined above, the company presently expects its first quarter pre-tax margin excluding net special items to be approximately 2 to 4 percent2. The company expects to report full year 2020 earnings per diluted share excluding net special items of between $4 and $62. |
Notes:
1. | All CASM guidance excludes the impact of fuel, net special items and new labor agreements. |
2. | The company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of net special items cannot be determined at this time. |
3. | Free cash flow is defined as operating cash flow less capital expenditures plus proceeds from sale-leaseback transactions. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Financial Update
January 23, 2020
Financial Comments
1Q20E | FY20E | ||||||
Total Mainline and Regional Guidance1 | |||||||
Available Seat Miles (ASMs) (bil) | ~68.4 | ~296.5 | ~299.3 | ||||
Year-over-Year Change (%) | ~2.5% | 4 | % | to | 5 | % | |
Cargo Revenues ($ mil)2 | ~185 | ||||||
Other Revenues ($ mil)2 | ~721 | ||||||
Average Fuel Price (incl. taxes) ($/gal) (as of 1/21/2020) | ~2.00 to ~2.05 | 2.05 | to | 2.10 | |||
Fuel Gallons Consumed (mil) | ~1,085 | ~4,750 | |||||
CASM ex fuel and net special items (guidance is YOY % change)3 | +2% to +4% | 0% | to | +2% | |||
Interest (Income) ($ mil) | ~(23) | ||||||
Interest Expense ($ mil) | ~255 | ||||||
Other Non-Operating (Income)/Expense ($ mil)4 | ~(110) | ||||||
Earnings per Share | $4.00 to $6.00 | ||||||
Annual Capex Guidance ($ mil) Inflow/(Outflow) | |||||||
Non-Aircraft Capex | (1,700) | ||||||
Gross Aircraft Capex & net PDPs | (1,647) | ||||||
Assumed Sale-Leaseback Proceeds | 1,492 | ||||||
Assumed Debt Financing | 939 | ||||||
Net Aircraft Capex & PDPs5 | 783 | ||||||
Notes:
1. | Includes guidance on certain non-GAAP measures, which exclude net special items. The company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of net special items cannot be determined at this time. Please see the GAAP to non-GAAP reconciliation at the end of this document. |
2. | Cargo/Other revenue includes cargo revenue, loyalty program revenue, and contract services. |
3. | CASM ex fuel, net special items and the impact of new labor agreements is a non-GAAP financial measure. |
4. | 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. |
5. | Numbers may not recalculate due to rounding. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Fleet Update
January 23, 2020
Fleet Comments
• | On March 13, 2019, a directive from the FAA grounded all U.S.-registered Boeing 737 MAX aircraft. The company currently has 76 Boeing 737 MAX Family aircraft on order and has not taken delivery of any Boeing 737 MAX Family aircraft since the grounding. The extent of the delay to the scheduled deliveries of the Boeing 737 MAX aircraft included in the table below is expected to be impacted by the length of time the FAA order remains in place, Boeing's production rate and the pace at which Boeing can deliver aircraft following the lifting of the FAA order, among other factors. The below table reflects the company's estimate of future Boeing 737 MAX aircraft deliveries based on information currently available; however, the actual delivery schedule is expected to differ from the table below. |
• | In 2020, the company expects to take delivery of 53 mainline aircraft comprised of 18 A321neo aircraft, 22 B738 MAX aircraft, 12 B788 aircraft and 1 used A319. The company also expects to retire 31 mainline aircraft, including 11 B763 aircraft and 20 E190 aircraft. |
• | In 2020, the company expects to increase the regional fleet count by a net of 12 aircraft, resulting from the net addition of 10 CRJ700 aircraft, 2 CRJ900 aircraft and 20 E175 aircraft, as well as the reduction of 4 CRJ200 and 16 ERJ140 aircraft. |
Active Mainline Year Ending Fleet Count | Active Regional Year Ending Fleet Count1 | |||||||||||||
2019A | 2020E | 2019A | 2020E | |||||||||||
A319 | 132 | 133 | CRJ200 | 19 | 15 | |||||||||
A320 | 48 | 48 | CRJ700 | 121 | 131 | |||||||||
A321 | 218 | 218 | CRJ900 | 126 | 128 | |||||||||
A321neo | 12 | 30 | E175 | 175 | 195 | |||||||||
A332 | 15 | 15 | ERJ140 | 46 | 30 | |||||||||
A333 | 9 | 9 | ERJ145 | 118 | 118 | |||||||||
B738 | 304 | 304 | 605 | 617 | ||||||||||
B738 MAX | 24 | 46 | ||||||||||||
B757 | 34 | 34 | ||||||||||||
B763 | 17 | 6 | ||||||||||||
B772 | 47 | 47 | ||||||||||||
B773 | 20 | 20 | ||||||||||||
B788 | 20 | 32 | ||||||||||||
B789 | 22 | 22 | ||||||||||||
E190 | 20 | — | ||||||||||||
942 | 964 | |||||||||||||
Notes:
1. | At the end of the fourth quarter of 2019, the company had 12 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
January 23, 2020
Shares Outstanding Comments
• | The estimated weighted average shares outstanding for 2020 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 $565 million remained available for use as of December 31, 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 43 percent from 756.1 million shares at merger close to 428.2 million shares outstanding on December 31, 2019. |
2020 Shares Outstanding (shares mil)1 | |||||||
Shares | |||||||
For Q1 | Basic | Diluted | |||||
Earnings | 428 | 429 | |||||
Net loss | 428 | 428 | |||||
Shares | |||||||
For FY 2020 Average | Basic | Diluted | |||||
Earnings | 429 | 430 | |||||
Net loss | 429 | 429 | |||||
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
January 23, 2020
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 net special items and fuel (non-GAAP measure). Management uses total operating costs excluding net 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, net special items may vary from period-to-period in nature and amount. These adjustments to exclude aircraft fuel and net 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 net 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 net special items may vary from period-to-period in nature and amount, the adjustment to exclude net special items allows management an additional tool to understand the company’s core operating performance.
American Airlines Group Inc. GAAP to Non-GAAP Reconciliation1 ($ mil except ASM and CASM data) | |||||||||||||||
1Q20 Range | FY20 Range | ||||||||||||||
Low | High | Low | High | ||||||||||||
Total operating expenses | $ | 10,460 | $ | 10,677 | $ | 43,712 | $ | 44,956 | |||||||
Less fuel expense | 2,170 | 2,224 | 9,738 | 9,975 | |||||||||||
Less operating net special items | — | — | — | — | |||||||||||
Total operating expense excluding fuel and net special items (Non-GAAP) | 8,290 | 8,452 | 33,975 | 34,981 | |||||||||||
Total CASM (cts) | 15.29 | 15.61 | 14.74 | 15.02 | |||||||||||
Total CASM excluding fuel and net special items (Non-GAAP) (cts) | 12.12 | 12.36 | 11.46 | 11.69 | |||||||||||
YOY (%) | 2.0 | % | 4.0 | % | 0.0 | % | 2.0 | % | |||||||
Total ASMs (bil) | 68.4 | 68.4 | 296.5 | 299.3 | |||||||||||
Notes: | Amounts may not recalculate due to rounding. |
1. | Certain of the guidance provided excludes net 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 net special items cannot be determined at this time. Net special items for this period may include, among others, fleet restructuring expenses, merger integration expenses and mark-to-market adjustments for equity and other investments. |
Please refer to the footnotes and the forward looking statements page of this document for additional information
Forward Looking Statements
January 23, 2020
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 September 30, 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