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): May 27, 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 7.01. | REGULATION FD DISCLOSURE. |
On May 27, 2020, American Airlines, Inc. (the "Company") distributed a letter to management and support staff. This internal communication is furnished herewith as Exhibit 99.1 and is incorporated by reference into this Item 7.01.
The information in this Item 7.01, including Exhibit 99.1, 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 | ||
104.1 | Cover page interactive data file (embedded within the Inline XBRL document). | |
Cautionary Statement Regarding Forward-Looking Statements
Certain of the statements contained in this report should be considered forward-looking statements within the meaning of 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 the Company’s 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 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 three months ended March 31, 2020 (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. In particular, the consequences of the coronavirus outbreak to economic conditions and the travel industry in general and the financial position and operating results of our company in particular have been material, are changing rapidly, and cannot be predicted. Additionally, 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 statement.
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: May 28, 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: May 28, 2020 | By: | /s/ Derek J. Kerr | |
Derek J. Kerr | |||
Executive Vice President and Chief Financial Officer | |||
Exhibit 99.1
May 27, 2020
Management and support staff (MSS) team:
Since the start of this pandemic, each day has brought a new challenge. Our team has tackled every obstacle with incredible tenacity while staying true to our mission to care for people on life’s journey. While navigating this pandemic, we are committed to three goals:
1. | Ensuring adequate cash to weather the downturn; |
2. | Reducing our cash burn by removing as much expense as possible; and |
3. | Restoring confidence in air travel. |
Although our pre-pandemic liquidity, the significant financial assistance provided by the government, and the cash we’ve raised in the capital markets provide a foundation for stability, we need to reduce our cost structure, including our most significant expense - the cost of compensation and benefits. And we must plan for operating a smaller airline for the foreseeable future.
We have already taken steps to prepare for this new reality, with nearly 39,000 team members electing to take a voluntary leave or early retirement. Fleet retirement accelerations are underway, and we will fly roughly 100 fewer aircraft next summer - mostly widebodies - than we had originally planned. Additionally, running a smaller airline means we will need a management and support staff team that is roughly 30% leaner.
A more efficient leadership team begins at the top, and we are restructuring all levels around key future leaders and functions, beginning with our officer team. We will announce a reorganized officer team soon, and those leaders will be restructuring at the next levels shortly thereafter.
In addition to the plans to reduce our MSS team by 30%, we are also announcing other cost-saving measures. These include:
• | Suspending the 2020 MSS merit program; |
• | Requiring MSS to take 50% of their vacation by Sept. 30 and suspending the vacation rollover policy so that no unused vacation days roll into 2021; and |
• | Canceling the 2020 L5 and above short-term incentive plan, which was scheduled to pay a portion of the target as a result of meeting operational metrics. |
As part of creating a more efficient management structure, we are opening a new voluntary early out program for MSS team members. Details can be found on Jetnet here, and the window to volunteer will remain open through the end of the day on June 10.
Once volunteers are known, leaders will then finalize the remainder of their go-forward MSS teams. If there are not enough early out volunteers, we will have to take the difficult step of involuntary separations. Those decisions will be communicated in July, though impacted team members will remain on payroll through Sept. 30, 2020, and will receive full pay and benefits through the expiration of the CARES Act Payroll Support Program. While no severance will be paid, in addition to full pay through September, we will also provide these team members with one year of D2R travel status as well as access to COBRA health coverage for 18 months. We offer this transparency and timing so those who may be impacted can make the best decision for themselves.
Once we ensure we have the right size and structure in place for our MSS team, we can begin the work for our frontline team, recognizing that we will be a smaller airline, with fewer routes and fewer flights. While we are still working through the details of our future schedule, we plan to open a new voluntary leave and early out program for frontline team members in June. We will have additional details on these programs in the
coming weeks. As we have previously stated, our preferred outcome is to properly size our frontline team for the future without having to implement involuntary furloughs. This is a goal, though, not a commitment, and a stretch goal at that. We will be working with our unions in the weeks and months ahead in hopes of developing programs to facilitate that goal.
In difficult times it is even more important that we stay true to our purpose of caring for people on life’s journey, even when that journey is a very difficult one. There is no doubt this is going to be a painful time for all, especially for our departing colleagues, who have given American Airlines their all and are leaving through no fault of their own. They deserve our respect and gratitude. Most of all, they are owed our renewed commitment and our collective effort to return American to profitability and growth as quickly as possible.
Thank you,
Elise Eberwein