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 22, 2021
(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:
(682 ) 278-9000
(682 ) 278-9000
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 April 22, 2021, American Airlines Group Inc. (the Company, we, us and our) issued a press release reporting financial results for the three months ended March 31, 2021. The press release is furnished as Exhibit 99.1.
| ITEM 7.01. | REGULATION FD DISCLOSURE. | ||||
On April 22, 2021, the Company provided a presentation to investors. The investor presentation is furnished as Exhibit 99.2.
Also on April 22, 2021, the Company provided an update for investors presenting information relating to its financial and operational outlook for the second quarter of 2021. This investor update is located on the Company’s website at www.aa.com under “Investor Relations.” The investor update is furnished as Exhibit 99.3.
The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1, 99.2 and 99.3, 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 | ||||||||
| 99.3 | ||||||||
| 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: April 22, 2021 | 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 22, 2021 | By: | /s/ Derek J. Kerr | |||||||||
| Derek J. Kerr | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
Exhibit 99.1
 | Corporate Communications | |||||||
| mediarelations@aa.com | ||||||||
| Investor Relations | ||||||||
| investor.relations@aa.com | ||||||||
FOR RELEASE: Thursday, April 22, 2021
AMERICAN AIRLINES REPORTS FIRST-QUARTER 2021
FINANCIAL RESULTS
FORT WORTH, Texas –– American Airlines Group Inc. (NASDAQ: AAL) today reported its first-quarter 2021 financial results, including:
•First-quarter revenue of $4.0 billion, down 53% year over year on a 39% year-over-year reduction in total available seat miles (ASMs).
•First-quarter net loss of $1.3 billion, or ($1.97) per share. Excluding net special items1, first-quarter net loss was $2.7 billion, or ($4.32) per share.
•Raised $10 billion through debt offering backed by the AAdvantage program and used a portion of the proceeds to prepay in full the secured loan from the U.S. Department of the Treasury.
•Ended the first quarter with approximately $17.3 billion of total available liquidity. Company expects to end the second quarter with approximately $19.5 billion in total available liquidity.
“We are incredibly proud of the American Airlines team for their continued care of our customers and each other,” said American’s Chairman and CEO Doug Parker. “Our team has shown up every day throughout the pandemic and served more customers than any other airline. That focus has served as our inspiration and positions us well as even more customers return to the skies.
“Looking forward, with the momentum underway from the first quarter, we see signs of continued recovery in demand. We remain confident the network enhancements, customer-focused improvements and efficiency measures we’ve put into place will ensure American is well-positioned for the recovery.”
American continues to take steps to strengthen its business and respond to the pandemic, with an emphasis on supporting its customers, team members and communities; reducing costs; and improving its liquidity position and balance sheet.
To support its customers, team members and communities, American:
•Enhanced its travel planning tool to help customers make informed decisions on where to travel and what to expect upon arrival. With one click, customers can view quarantine, document or testing requirements, as well as book flights.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 2
•Expanded acceptance of VeriFLY, the mobile health wallet that simplifies and verifies travel requirements, to include all international flights to the U.S. and flights from the U.S. to 11 countries. American’s partners Aer Lingus, British Airways, Iberia and Japan Airlines also began accepting VeriFLY during the first quarter.
•Expanded its touchless technology trial to allow customers to use biometric scanners to check their bags prior to departure at Dallas-Fort Worth International Airport (DFW). American will utilize the same technology to allow customers to gain entrance to an Admirals Club lounge at DFW later this year and will consider additional airport solutions going forward.
•Updated its mask requirement to align with directives from the Centers for Disease Control and Prevention and the Transportation Security Administration.
•Expanded preflight COVID-19 testing options to give customers access to in-person testing at more than 150 local urgent care facilities and hospitals through GoHealth Urgent Care. American also now allows customers to redeem AAdvantage® miles for at-home COVID-19 testing kits through LetsGetChecked.
•Canceled the 13,000 WARN notices sent to team members in February following the passage of the COVID-19 relief package that includes an extension of the Payroll Support Program (PSP).
•Introduced an incentive program to encourage team members to get the COVID-19 vaccine. American’s U.S.-based mainline and wholly owned team members who get vaccinated will receive an extra vacation day in 2022 as well as $50 in recognition points.
•Partnered with health care providers and airports to establish on-site team member vaccination locations in Chicago, Charlotte, Dallas-Fort Worth and Tulsa.
•Continued to transport critical goods, including the COVID-19 vaccine, through strategic cargo-only flights. American helped customers move 230 million pounds of goods around the world in the first quarter, including 98 million pounds on its nearly 2,700 cargo-only flights.
•Reached agreements with Deloitte and Kuehne+Nagel to help stimulate more production of sustainable aviation fuel and help our customers reduce their emissions from travel.
To reduce costs and conserve cash, American:
•Incorporated more than $1.3 billion of permanent non-volume cost reductions into its 2021 plans. This includes approximately $500 million in management reductions, $600 million in labor productivity enhancements, and $200 million in other permanent cost reductions.
•Reached an agreement with Boeing to defer and convert five 787-8 aircraft to 787-9 aircraft. These deliveries are now expected to occur in 2023 and will retain their existing financing. American’s remaining 14 787-8 aircraft will now be delivered by the end of the first quarter of 2022.
•Exercised its remaining deferral rights on the Boeing 737 MAX aircraft that were previously scheduled to be delivered in 2021 and 2022. With this adjustment, the delivery of these 18 MAX aircraft is now expected to occur in 2023 and 2024.
•Accelerated its cabin-standardization program by a year with all Boeing 737s expected to be completed by the second quarter of 2021 and all Airbus A321s expected to be completed by the end of 2021.
•Enhanced its technology capabilities through a virtual assistant for customers in the American Airlines mobile app; ConnectMe, a real-time chat tool for airport team members; and an automated crew recovery program.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 3
•Opened a new voluntary early out program in February, which approximately 1,600 team members opted into.
To improve its liquidity position and balance sheet, American:
•Reduced its average cash burn rate2 to approximately $27 million per day in the first quarter. This includes approximately $9 million per day in regular debt principal and cash severance payments. For the month of March, the Company’s estimated average daily cash burn rate was approximately $4 million. Excluding approximately $8 million per day of regular debt principal and cash severance payments, the Company’s cash burn rate turned positive in March.
•Obtained the right to access an additional $3.3 billion in financial assistance through the COVID-19 relief package passed and signed into law in early March. In addition to extending the PSP, the legislation will allow the Company to defer approximately $2 billion in pension funding over the next five years.
•Issued $6.5 billion of bonds and entered into a new $3.5 billion term loan facility, using the AAdvantage program as collateral for both.
•Used a portion of the proceeds from the AAdvantage financing to prepay its secured loan from the U.S. Department of the Treasury. In doing so, American has terminated its loan commitments under the secured loan agreement authorized by the CARES Act.
•Repaid in full $2.8 billion under three separate revolving credit facilities, reducing the Company’s outstanding debt by $2.8 billion without changing its total available liquidity. American is able to draw upon the revolving commitments again or leave them undrawn, per the terms of the underlying credit agreements until such commitments expire, which is currently scheduled to occur in October 2024 for substantially all of the commitments.
•Related to the aforementioned deferral of Boeing 737 MAX aircraft, in April the Company elected to prepay $248 million of outstanding loans under its pre-delivery payment 737 MAX credit facility with the related pre-delivery deposits to be returned to the Company from the resulting deferral.
•Expects to end the second quarter with approximately $19.5 billion in total available liquidity.
Network and partnerships
American advanced its newly formed partnerships with Alaska Airlines and JetBlue Airways in the first quarter. Alaska officially joined oneworld as a full member, giving customers more choices and benefits and a seamless travel experience not only on the West Coast but throughout the world. American also expanded its codeshare with Alaska and launched new service between Seattle and London. Additionally, American and JetBlue together will introduce 57 new domestic and international routes for customers in New York and Boston beginning in June. The airlines are also significantly expanding their codeshare to include more than 100 new flights. The Alaska and JetBlue partnerships will continue to deliver significant benefits for consumers and allow for efficient growth, with new service launching later this year between Seattle and Shanghai and Bangalore, and between New York and Tel Aviv, Athens, Santiago and New Delhi.
Forward outlook
The Company will continue to match its forward capacity with observed bookings trends. Based on current trends, American expects its second-quarter capacity to be down 20 to 25% compared to the second quarter of 2019. The Company expects its second-quarter total
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 4
revenue to be down approximately 40% versus the second quarter 2019. The Company also expects its second quarter pre-tax margin excluding net special items3 will be between negative 27% and negative 30%.
For additional financial forecasting detail, please refer to the Company’s investor update, filed with this press release with the SEC on Form 8-K. This filing will be available at
aa.com/investorrelations.
Conference call and webcast details
The Company will conduct a live audio webcast of its financial results conference call at 7:30 a.m. CDT today. The call 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 22.
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.The Company recognized $1.95 billion of net special credits before the effect of taxes in the first quarter. Net special credits principally include a credit of $2.1 billion related to the financial assistance received pursuant to Payroll Support Program Extension Agreement offset in part by severance charges related to voluntary early retirement programs offered to team members during the first quarter.
2.A reconciliation of this calculation can be found in the tables that follow.
3.American 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.
About American Airlines Group
American's purpose is to care for people on life’s journey. 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.
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, 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, the continuing availability of borrowings under revolving lines of credit, 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 herein as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 5
March 31, 2021 (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 the 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.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
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 Increase | |||||||||||||||||||
| 2021 | 2020 (1) | (Decrease) | ||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||
| Passenger | $ | 3,179 | $ | 7,681 | (58.6) | |||||||||||||||
| Cargo | 315 | 147 | nm | (2) | ||||||||||||||||
| Other | 514 | 687 | (25.3) | |||||||||||||||||
| Total operating revenues | 4,008 | 8,515 | (52.9) | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Aircraft fuel and related taxes | 1,034 | 1,784 | (42.0) | |||||||||||||||||
| Salaries, wages and benefits | 2,730 | 3,219 | (15.2) | |||||||||||||||||
| Regional expenses: | ||||||||||||||||||||
| Regional operating expenses | 544 | 1,057 | (48.6) | |||||||||||||||||
| Regional depreciation and amortization | 81 | 83 | (2.7) | |||||||||||||||||
| Maintenance, materials and repairs | 376 | 629 | (40.2) | |||||||||||||||||
| Other rent and landing fees | 570 | 611 | (6.6) | |||||||||||||||||
| Aircraft rent | 351 | 334 | 4.9 | |||||||||||||||||
| Selling expenses | 151 | 385 | (60.8) | |||||||||||||||||
| Depreciation and amortization | 478 | 560 | (14.6) | |||||||||||||||||
| Special items, net | (1,708) | 1,132 | nm | |||||||||||||||||
| Other | 716 | 1,270 | (43.6) | |||||||||||||||||
| Total operating expenses | 5,323 | 11,064 | (51.9) | |||||||||||||||||
| Operating loss | (1,315) | (2,549) | (48.4) | |||||||||||||||||
| Nonoperating income (expense): | ||||||||||||||||||||
| Interest income | 4 | 21 | (83.3) | |||||||||||||||||
| Interest expense, net | (371) | (257) | 43.9 | |||||||||||||||||
| Other income (expense), net | 109 | (105) | nm | |||||||||||||||||
| Total nonoperating expense, net | (258) | (341) | (24.3) | |||||||||||||||||
| Loss before income taxes | (1,573) | (2,890) | (45.6) | |||||||||||||||||
| Income tax benefit | (323) | (649) | (50.1) | |||||||||||||||||
| Net loss | $ | (1,250) | $ | (2,241) | (44.2) | |||||||||||||||
| Loss per common share: | ||||||||||||||||||||
| Basic and diluted | $ | (1.97) | $ | (5.26) | ||||||||||||||||
| Weighted average shares outstanding (in thousands): | ||||||||||||||||||||
| Basic and diluted | 634,609 | 425,713 | ||||||||||||||||||
Note: Percent change may not recalculate due to rounding.
(1)Beginning in the first quarter of 2021, aircraft fuel and related taxes as well as certain salaries, wages and benefits, other rent and landing fees, selling and other expenses are no longer allocated to regional expenses on the Company's condensed consolidated statements of operations. The first quarter of 2020 condensed consolidated statement of operations has been recast to conform to the 2021 presentation. This statement of operations presentation change has no impact on total operating expenses or net loss.
(2)Not meaningful or greater than 100% change.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 7
American Airlines Group Inc.
Consolidated Operating Statistics (1)
(Unaudited)
| 3 Months Ended March 31, | Increase | ||||||||||||||||
| 2021 | 2020 | (Decrease) | |||||||||||||||
| Revenue passenger miles (millions) | 22,464 | 45,171 | (50.3) | % | |||||||||||||
| Available seat miles (ASM) (millions) | 37,764 | 62,099 | (39.2) | % | |||||||||||||
| Passenger load factor (percent) | 59.5 | 72.7 | (13.2) | pts | |||||||||||||
| Yield (cents) | 14.15 | 17.00 | (16.8) | % | |||||||||||||
| Passenger revenue per ASM (cents) | 8.42 | 12.37 | (31.9) | % | |||||||||||||
| Total revenue per ASM (cents) | 10.61 | 13.71 | (22.6) | % | |||||||||||||
| Cargo ton miles (millions) | 532 | 436 | 22.1 | % | |||||||||||||
| Cargo yield per ton mile (cents) | 59.18 | 33.62 | 76.0 | % | |||||||||||||
| Fuel consumption (gallons in millions) | 608 | 972 | (37.4) | % | |||||||||||||
| Average aircraft fuel price including related taxes (dollars per gallon) | 1.70 | 1.83 | (7.4) | % | |||||||||||||
| Operating cost per ASM (cents) | 14.09 | 17.82 | (20.9) | % | |||||||||||||
| Operating cost per ASM excluding net special items (cents) | 19.19 | 15.84 | 21.1 | % | |||||||||||||
| Operating cost per ASM excluding net special items and fuel (cents) | 16.45 | 12.97 | 26.8 | % | |||||||||||||
| Passenger enplanements (thousands) | 24,238 | 42,201 | (42.6) | % | |||||||||||||
| Departures (thousands): | |||||||||||||||||
| Mainline | 153 | 253 | (39.5) | % | |||||||||||||
| Regional | 186 | 279 | (33.5) | % | |||||||||||||
| Total | 339 | 532 | (36.4) | % | |||||||||||||
| Average stage length (miles): | |||||||||||||||||
| Mainline | 1,205 | 1,153 | 4.5 | % | |||||||||||||
| Regional | 505 | 469 | 7.7 | % | |||||||||||||
| Total | 821 | 794 | 3.4 | % | |||||||||||||
| Aircraft at end of period: | |||||||||||||||||
Mainline (2) | 851 | 942 | (9.7) | % | |||||||||||||
Regional (3) | 548 | 542 | 1.1 | % | |||||||||||||
| Total | 1,399 | 1,484 | (5.7) | % | |||||||||||||
| Full-time equivalent employees at end of period: | |||||||||||||||||
| Mainline | 88,500 | 104,400 | (15.2) | % | |||||||||||||
Regional (4) | 24,700 | 27,100 | (8.9) | % | |||||||||||||
| Total | 113,200 | 131,500 | (13.9) | % | |||||||||||||
Note: Amounts may not recalculate due to rounding.
(1)Unless otherwise noted, operating statistics include mainline and regional operations. Regional includes wholly-owned regional airline subsidiaries and operating results from capacity purchase carriers.
(2)Excludes 35 Boeing 737-800 mainline aircraft that are in temporary storage at March 31, 2021.
(3)Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes two Embraer 145 regional aircraft that are in temporary storage at March 31, 2021.
(4)Regional full-time equivalent employees only include our wholly-owned regional airline subsidiaries.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 8
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
| 3 Months Ended March 31, | Increase | ||||||||||||||||
| 2021 | 2020 | (Decrease) | |||||||||||||||
Domestic (1) | |||||||||||||||||
| Revenue passenger miles (millions) | 18,538 | 31,856 | (41.8) | % | |||||||||||||
| Available seat miles (ASM) (millions) | 27,952 | 44,238 | (36.8) | % | |||||||||||||
| Passenger load factor (percent) | 66.3 | 72.0 | (5.7) | pts | |||||||||||||
| Passenger revenue (dollars in millions) | 2,655 | 5,780 | (54.1) | % | |||||||||||||
| Yield (cents) | 14.32 | 18.14 | (21.1) | % | |||||||||||||
| Passenger revenue per ASM (cents) | 9.50 | 13.07 | (27.3) | % | |||||||||||||
Latin America (2) | |||||||||||||||||
| Revenue passenger miles (millions) | 3,576 | 7,116 | (49.7) | % | |||||||||||||
| Available seat miles (millions) | 7,865 | 9,068 | (13.3) | % | |||||||||||||
| Passenger load factor (percent) | 45.5 | 78.5 | (33.0) | pts | |||||||||||||
| Passenger revenue (dollars in millions) | 482 | 1,180 | (59.2) | % | |||||||||||||
| Yield (cents) | 13.47 | 16.57 | (18.8) | % | |||||||||||||
| Passenger revenue per ASM (cents) | 6.12 | 13.01 | (52.9) | % | |||||||||||||
| Atlantic | |||||||||||||||||
| Revenue passenger miles (millions) | 199 | 4,185 | (95.2) | % | |||||||||||||
| Available seat miles (millions) | 1,151 | 6,239 | (81.5) | % | |||||||||||||
| Passenger load factor (percent) | 17.4 | 67.1 | (49.7) | pts | |||||||||||||
| Passenger revenue (dollars in millions) | 22 | 523 | (95.8) | % | |||||||||||||
| Yield (cents) | 11.10 | 12.50 | (11.2) | % | |||||||||||||
| Passenger revenue per ASM (cents) | 1.93 | 8.39 | (77.0) | % | |||||||||||||
| Pacific | |||||||||||||||||
| Revenue passenger miles (millions) | 151 | 2,014 | (92.5) | % | |||||||||||||
| Available seat miles (millions) | 796 | 2,554 | (68.8) | % | |||||||||||||
| Passenger load factor (percent) | 18.9 | 78.8 | (59.9) | pts | |||||||||||||
| Passenger revenue (dollars in millions) | 20 | 198 | (89.7) | % | |||||||||||||
| Yield (cents) | 13.53 | 9.84 | 37.4 | % | |||||||||||||
| Passenger revenue per ASM (cents) | 2.56 | 7.76 | (67.0) | % | |||||||||||||
| Total International | |||||||||||||||||
| Revenue passenger miles (millions) | 3,926 | 13,315 | (70.5) | % | |||||||||||||
| Available seat miles (millions) | 9,812 | 17,861 | (45.1) | % | |||||||||||||
| Passenger load factor (percent) | 40.0 | 74.5 | (34.5) | pts | |||||||||||||
| Passenger revenue (dollars in millions) | 524 | 1,901 | (72.4) | % | |||||||||||||
| Yield (cents) | 13.35 | 14.28 | (6.5) | % | |||||||||||||
| Passenger revenue per ASM (cents) | 5.34 | 10.64 | (49.8) | % | |||||||||||||
Note: Amounts may not recalculate due to rounding.
(1)Domestic results include Canada, Puerto Rico and U.S. Virgin Islands.
(2)Latin America results include the Caribbean.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
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 Loss (GAAP measure) to Pre-Tax Loss Excluding Net Special Items (non-GAAP measure)
•Pre-Tax Margin (GAAP measure) to Pre-Tax Margin Excluding Net Special Items (non-GAAP measure)
•Net Loss (GAAP measure) to Net Loss Excluding Net Special Items (non-GAAP measure)
•Basic and Diluted Loss Per Share (GAAP measure) to Basic and Diluted Loss Per Share Excluding Net Special Items (non-GAAP measure)
•Operating Loss (GAAP measure) to Operating Loss 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 aircraft 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 Loss Excluding Net Special Items | 3 Months Ended March 31, | |||||||||||||
| 2021 | 2020 | |||||||||||||
| (in millions, except share and per share amounts) | ||||||||||||||
| Pre-tax loss as reported | $ | (1,573) | $ | (2,890) | ||||||||||
| Pre-tax net special items: | ||||||||||||||
Mainline operating special items, net (1) | (1,708) | 1,132 | ||||||||||||
Regional operating special items, net (2) | (215) | 93 | ||||||||||||
Nonoperating special items, net (3) | (23) | 217 | ||||||||||||
| Total pre-tax net special items | (1,946) | 1,442 | ||||||||||||
| Pre-tax loss excluding net special items | $ | (3,519) | $ | (1,448) | ||||||||||
| Calculation of Pre-Tax Margin | ||||||||||||||
| Pre-tax loss as reported | $ | (1,573) | $ | (2,890) | ||||||||||
| Total operating revenues as reported | $ | 4,008 | $ | 8,515 | ||||||||||
| Pre-tax margin | -39.3 | % | -33.9 | % | ||||||||||
| Calculation of Pre-Tax Margin Excluding Net Special Items | ||||||||||||||
| Pre-tax loss excluding net special items | $ | (3,519) | $ | (1,448) | ||||||||||
| Total operating revenues as reported | $ | 4,008 | $ | 8,515 | ||||||||||
| Pre-tax margin excluding net special items | -87.8 | % | -17.0 | % | ||||||||||
| Reconciliation of Net Loss Excluding Net Special Items | ||||||||||||||
| Net loss as reported | $ | (1,250) | $ | (2,241) | ||||||||||
| Net special items: | ||||||||||||||
Total pre-tax net special items (1), (2), (3) | (1,946) | 1,442 | ||||||||||||
| Net tax effect of net special items | 453 | (330) | ||||||||||||
| Net loss excluding net special items | $ | (2,743) | $ | (1,129) | ||||||||||
| Reconciliation of Basic and Diluted Loss Per Share Excluding Net Special Items | ||||||||||||||
| Net loss excluding net special items | $ | (2,743) | $ | (1,129) | ||||||||||
| Shares used for computation (in thousands): | ||||||||||||||
| Basic and diluted | 634,609 | 425,713 | ||||||||||||
| Loss per share excluding net special items: | ||||||||||||||
| Basic and diluted | $ | (4.32) | $ | (2.65) | ||||||||||
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 10
| Reconciliation of Operating Loss Excluding Net Special Items | 3 Months Ended March 31, | |||||||||||||
| 2021 | 2020 | |||||||||||||
| (in millions) | ||||||||||||||
| Operating loss as reported | $ | (1,315) | $ | (2,549) | ||||||||||
| Operating net special items: | ||||||||||||||
Mainline operating special items, net (1) | (1,708) | 1,132 | ||||||||||||
Regional operating special items, net (2) | (215) | 93 | ||||||||||||
| Operating loss excluding net special items | $ | (3,238) | $ | (1,324) | ||||||||||
| Reconciliation of Total Operating Cost per ASM Excluding Net Special Items and Fuel | ||||||||||||||
| Total operating expenses as reported | $ | 5,323 | $ | 11,064 | ||||||||||
| Operating net special items: | ||||||||||||||
Mainline operating special items, net (1) | 1,708 | (1,132) | ||||||||||||
Regional operating special items, net (2) | 215 | (93) | ||||||||||||
| Total operating expenses, excluding net special items | 7,246 | 9,839 | ||||||||||||
| Aircraft fuel and related taxes | (1,034) | (1,784) | ||||||||||||
| Total operating expenses, excluding net special items and fuel | $ | 6,212 | $ | 8,055 | ||||||||||
| (in cents) | ||||||||||||||
| Total operating expenses per ASM as reported | 14.09 | 17.82 | ||||||||||||
| Operating net special items per ASM: | ||||||||||||||
Mainline operating special items, net (1) | 4.52 | (1.82) | ||||||||||||
Regional operating special items, net (2) | 0.57 | (0.15) | ||||||||||||
| Total operating expenses per ASM, excluding net special items | 19.19 | 15.84 | ||||||||||||
| Aircraft fuel and related taxes per ASM | (2.74) | (2.87) | ||||||||||||
| Total operating expenses per ASM, excluding net special items and fuel | 16.45 | 12.97 | ||||||||||||
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1)The 2021 first quarter mainline operating special items, net principally included $1.9 billion of Payroll Support Program (PSP) financial assistance, offset in part by $168 million of salary and medical costs primarily associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to the Company's operation due to the COVID-19 pandemic.
Cash payments for salary and medical costs associated with our voluntary early retirement programs were approximately $170 million for the 2021 first quarter.
The 2020 first quarter mainline operating special items, net principally included $744 million of fleet impairment charges, $218 million of one-time labor contract expenses resulting from the ratification of a new contract with the Company's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases, and $205 million of salary and medical costs primarily associated with certain team members who opted in to a voluntary early retirement program.
Fleet impairment charges in the 2020 first quarter included a $676 million non-cash write-down of aircraft and spare parts and $68 million in write-offs of right-of-use assets and lease return costs associated with our mainline fleet, principally Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 fleets, which were retired as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(2)The 2021 first quarter regional operating special items, net included $244 million of PSP financial assistance, offset in part by $27 million of fleet impairment charges. The fleet impairment charges principally included a non-cash write-down of regional aircraft resulting from the Company’s decision to retire its remaining fleet of Embraer 140 aircraft earlier than planned.
The 2020 first quarter regional operating special items, net primarily included an $88 million non-cash write-down of regional aircraft, principally related to the retirement of certain Embraer 140 and Bombardier CRJ200 aircraft as a result of the decline in demand for air travel due to the COVID-19 pandemic.
(3)Principally included mark-to-market net unrealized gains and losses associated with certain equity investments and treasury rate lock derivative instruments as well as non-cash charges associated with debt refinancings and extinguishments.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 11
Average Daily Cash Burn
The Company's average daily cash burn is presented in the table below, which is a non-GAAP measure that management believes is useful information to investors and others in evaluating the Company's liquidity position and cash flows from its core operating performance. The Company defines cash burn as net cash provided by (used in) operating activities, net cash provided by (used in) investing activities and net cash provided by (used in) financing activities, adjusted for (1) Payroll Support Program financial assistance, (2) net purchases (proceeds from sale) of short-term investments and restricted short-term investments, (3) proceeds from issuance of long-term debt, net of deferred financing costs, but excluding aircraft financing, (4) proceeds from issuance of equity, (5) prepayments of long-term debt and (6) other cash flows that are not representative of the Company's core operating performance.
This non-GAAP measure 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.
| 3 Months Ended March 31, 2021 | 3 Months Ended December 31, 2020 | 3 Months Ended September 30, 2020 | 3 Months Ended June 30, 2020 | |||||||||||||||||||||||
| (in millions, except days in period) | ||||||||||||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 174 | $ | (2,800) | $ | (2,612) | $ | (963) | ||||||||||||||||||
| Net cash provided by (used in) investing activities | (7,152) | 1,696 | 923 | (6,799) | ||||||||||||||||||||||
| Net cash provided by financing activities | 7,013 | 1,206 | 1,519 | 7,743 | ||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Payroll Support Program financial assistance | (2,191) | — | (525) | (3,693) | ||||||||||||||||||||||
| Net purchases (proceeds from sale) of short-term investments and restricted short-term investments | 7,336 | (1,422) | (1,391) | 6,608 | ||||||||||||||||||||||
| Proceeds from issuance of non-aircraft long-term debt, net of deferred financing costs | (10,699) | — | (1,926) | (7,714) | ||||||||||||||||||||||
| Proceeds from issuance of equity | (316) | (1,443) | — | (1,525) | ||||||||||||||||||||||
| Prepayments of long-term debt | 3,393 | — | — | 1,047 | ||||||||||||||||||||||
| Other | — | — | — | — | ||||||||||||||||||||||
Total cash burn (1) | $ | (2,442) | $ | (2,763) | $ | (4,012) | $ | (5,296) | ||||||||||||||||||
| Days in period | 90 | 92 | 92 | 91 | ||||||||||||||||||||||
| Average daily cash burn | $ | (27) | $ | (30) | $ | (44) | $ | (58) | ||||||||||||||||||
Note: Amounts may not recalculate due to rounding.
(1)Of the total cash burn for each of the three months ended March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, approximately $660 million, $515 million, $540 million and $505 million were cash payments for debt amortization, respectively, and approximately $170 million, $195 million, $120 million and $50 million were cash payments for salary and medical costs principally for the Company's voluntary early retirement programs, respectively, totaling an equivalent of approximately $9 million, $8 million, $8 million and $6 million per day, respectively.
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 12
American Airlines Group Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)(Unaudited)
| 3 Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Net cash provided by (used in) operating activities | $ | 174 | $ | (168) | |||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures, net of aircraft purchase deposit returns | 19 | (845) | |||||||||
| Proceeds from sale of property and equipment | 108 | 35 | |||||||||
| Proceeds from sale-leaseback transactions | 99 | 280 | |||||||||
| Purchases of short-term investments | (8,557) | (820) | |||||||||
| Sales of short-term investments | 1,415 | 1,237 | |||||||||
| Increase in restricted short-term investments | (194) | — | |||||||||
| Other investing activities | (42) | (49) | |||||||||
| Net cash used in investing activities | (7,152) | (162) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of long-term debt | 10,861 | 1,698 | |||||||||
| Payments on long-term debt and finance leases | (4,054) | (926) | |||||||||
| Proceeds from issuance of equity | 316 | — | |||||||||
| Deferred financing costs | (162) | (31) | |||||||||
| Treasury stock repurchases and shares withheld for taxes pursuant to employee stock plans | (13) | (171) | |||||||||
| Dividend payments | — | (43) | |||||||||
| Other financing activities | 65 | (1) | |||||||||
| Net cash provided by financing activities | 7,013 | 526 | |||||||||
| Net increase in cash and restricted cash | 35 | 196 | |||||||||
| Cash and restricted cash at beginning of period | 399 | 290 | |||||||||
Cash and restricted cash at end of period (1) | $ | 434 | $ | 486 | |||||||
(1)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
| Cash | $ | 277 | $ | 474 | |||||||
| Restricted cash included in restricted cash and short-term investments | 157 | 12 | |||||||||
| Total cash and restricted cash | $ | 434 | $ | 486 | |||||||
American Airlines Reports First-Quarter 2021 Financial Results
April 22, 2021
Page 13
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions, except shares)
| March 31, 2021 | December 31, 2020 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 277 | $ | 245 | |||||||
| Short-term investments | 13,762 | 6,619 | |||||||||
| Restricted cash and short-term investments | 806 | 609 | |||||||||
| Accounts receivable, net | 971 | 1,342 | |||||||||
| Aircraft fuel, spare parts and supplies, net | 1,658 | 1,614 | |||||||||
| Prepaid expenses and other | 615 | 666 | |||||||||
| Total current assets | 18,089 | 11,095 | |||||||||
| Operating property and equipment | |||||||||||
| Flight equipment | 37,480 | 37,816 | |||||||||
| Ground property and equipment | 9,108 | 9,194 | |||||||||
| Equipment purchase deposits | 1,136 | 1,446 | |||||||||
| Total property and equipment, at cost | 47,724 | 48,456 | |||||||||
| Less accumulated depreciation and amortization | (16,827) | (16,757) | |||||||||
| Total property and equipment, net | 30,897 | 31,699 | |||||||||
| Operating lease right-of-use assets | 8,000 | 8,039 | |||||||||
| Other assets | |||||||||||
| Goodwill | 4,091 | 4,091 | |||||||||
| Intangibles, net | 2,019 | 2,029 | |||||||||
| Deferred tax asset | 3,632 | 3,239 | |||||||||
| Other assets | 1,921 | 1,816 | |||||||||
| Total other assets | 11,663 | 11,175 | |||||||||
| Total assets | $ | 68,649 | $ | 62,008 | |||||||
| Liabilities and Stockholders’ Equity (Deficit) | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt and finance leases | $ | 2,444 | $ | 2,797 | |||||||
| Accounts payable | 1,624 | 1,196 | |||||||||
| Accrued salaries and wages | 1,576 | 1,716 | |||||||||
| Air traffic liability | 5,598 | 4,757 | |||||||||
| Loyalty program liability | 2,323 | 2,033 | |||||||||
| Operating lease liabilities | 1,595 | 1,651 | |||||||||
| Other accrued liabilities | 2,173 | 2,419 | |||||||||
| Total current liabilities | 17,333 | 16,569 | |||||||||
| Noncurrent liabilities | |||||||||||
| Long-term debt and finance leases, net of current maturities | 37,247 | 29,796 | |||||||||
| Pension and postretirement benefits | 6,765 | 7,069 | |||||||||
| Loyalty program liability | 7,055 | 7,162 | |||||||||
| Operating lease liabilities | 6,738 | 6,777 | |||||||||
| Other liabilities | 1,456 | 1,502 | |||||||||
| Total noncurrent liabilities | 59,261 | 52,306 | |||||||||
| Stockholders' equity (deficit) | |||||||||||
| Common stock, 641,374,475 shares outstanding at March 31, 2021 | 6 | 6 | |||||||||
| Additional paid-in capital | 6,980 | 6,894 | |||||||||
| Accumulated other comprehensive loss | (7,036) | (7,103) | |||||||||
| Retained deficit | (7,895) | (6,664) | |||||||||
| Total stockholders' deficit | (7,945) | (6,867) | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 68,649 | $ | 62,008 | |||||||
Certain of the statements contained in this presentation should be considered forward-looking statements within the meaning of the Securities Act, 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, the continuing availability of borrowings under revolving lines of credit, 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 herein as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (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 the 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. 2
• • • • • • 1/ Please refer to the Company's GAAP to non-GAAP reconciliation in the appendix
5 Double Down on Operational Excellence Reconnect with Our Customers Build on Team Momentum Passionately Pursue Efficiencies
• • • • • • • • • • • • • •
• 9 Source: Internal data as of 4/20/2021
10 1/ Source- Company reports •
• • • 1/ Subject to ongoing investigation by the US Department of Justice and the New York Attorney General, the Massachusetts Attorney General, and the Attorney Generals of certain other state and local jurisdictions 11
1. Prepared for the Air 12
14 Note: May not calculate due to rounding.
15 • • • • • •
• • 16 • •
$6.8 $10.2 $13.6 $14.3 $17.3 ~$19.5B 17 • • 1/ Total available liquidity is defined as unrestricted cash and marketable securities plus available undrawn revolver capacity and other undrawn facilities.
18 2Q21 vs 2Q19 Total Capacity ~ - 20% to -25% Total Revenue ~ - 40% CASM excluding fuel and special items1 ~ +13% to +17% 2Q21 2Q21 Comments Fuel $1.84 to $1.89 / gal Based on April 21, 2021 forward curve and planned consumption of ~873 million gallons Pretax margin excluding net special items1 ~ -27% to -30% Includes non-operating expense of ~$385 million Liquidity2 ~$19.5 billion Includes PSP3 financial assistance Capex (inflow) FY 2021 ($100 mil) Return of PDPs drives $100 million inflow in FY 2021
20 Reconciliation of Pre-Tax Loss Excluding Net Special Items 2021 2020 Pre-tax loss as reported (1,573)$ (2,890)$ Pre-tax net special items: Mainline operating special items, net (1) (1,708) 1,132 Regional operating special items, net (2) (215) 93 Nonoperating special items, net (3) (23) 217 Total pre-tax net special items (1,946) 1,442 Pre-tax loss excluding net special items (3,519)$ (1,448)$ Calculation of Pre-Tax Margin Pre-tax loss as reported $ (1,573) $ (2,890) Total operating revenues as reported $ 4,008 $ 8,515 Pre-tax margin -39.3% -33.9% Calculation of Pre-Tax Margin Excluding Net Special Items Pre-tax loss excluding net special items $ (3,519) $ (1,448) Total operating revenues as reported $ 4,008 $ 8,515 Pre-tax margin excluding net special items -87.8% -17.0% Reconciliation of Net Loss Excluding Net Special Items Net loss as reported (1,250)$ (2,241)$ Net special items: Total pre-tax net special items (1), (2), (3) (1,946) 1,442 Net tax effect of net special items 453 (330) Net loss excluding net special items (2,743)$ (1,129)$ Reconciliation of Basic and Diluted Loss Per Share Excluding Net Special Items Net loss excluding net special items (2,743)$ (1,129)$ Shares used for computation (in thousands): Basic and diluted 634,609 425,713 Loss per share excluding net special items: Basic and diluted (4.32)$ (2.65)$ 3 Months Ended March 31, (in millions, except share and per share amounts) Note: Amounts may not recalculate due to rounding. FOOTNOTES: (1) (2) (3) The 2021 first quarter regional operating special items, net included $244 million of PSP financial assistance, offset in part by $27 million of fleet impairment charges. The fleet impairment charges principally included a non-cash write-down of regional aircraft resulting from the Company’s decision to retire its remaining fleet of Embraer 140 aircraft earlier than planned. The 2020 first quarter regional operating special items, net primarily included an $88 million non-cash write-down of regional aircraft, principally related to the retirement of certain Embraer 140 and Bombardier CRJ200 aircraft as a result of the decline in demand for air travel due to the COVID-19 pandemic. The 2021 first quarter mainline operating special items, net principally included $1.9 billion of Payroll Support Program (PSP) financial assistance, offset in part by $168 million of salary and medical costs primarily associated with certain team members who opted in to voluntary early retirement programs offered as a result of reductions to the Company's operation due to the COVID-19 pandemic. Cash payments for salary and medical costs associated with our voluntary early retirement programs were approximately $170 million for the 2021 first quarter. The 2020 first quarter mainline operating special items, net principally included $744 million of fleet impairment charges, $218 million of one-time labor contract expenses resulting from the ratification of a new contract with the Company's maintenance and fleet service team members, including signing bonuses and adjustments to vacation accruals resulting from pay rate increases, and $205 million of salary and medical costs primarily associated with certain team members who opted in to a voluntary early retirement program. Fleet impairment charges in the 2020 first quarter included a $676 million non-cash write-down of aircraft and spare parts and $68 million in write-offs of right-of-use assets and lease return costs associated with our mainline fleet, principally Boeing 757, Boeing 767, Airbus A330-300 and Embraer 190 fleets, which were retired as a result of the decline in demand for air travel due to the COVID-19 pandemic. Principally included mark-to-market net unrealized gains and losses associated with certain equity investments and treasury rate lock derivative instruments as well as non-cash charges associated with debt refinancings and extinguishments.
21 Average Daily Cash Burn 3 Months Ended March 31, 2021 3 Months Ended December 31, 2020 3 Months Ended September 30, 2020 3 Months Ended June 30, 2020 Net cash provided by (used in) operating activities 174$ (2,800)$ (2,612)$ (963)$ Net cash provided by (used in) investing activities (7,152) 1,696 923 (6,799) Net cash provided by financing activities 7,013 1,206 1,519 7,743 Adjustments: Payroll Support Program financial assistance (2,191) - (525) (3,693) Net purchases (proceeds from sale) of short-term investments and restricted short-term investments 7,336 (1,422) (1,391) 6,608 Proceeds from issuance of non-aircraft long-term debt, net of deferred financing costs (10,699) - (1,926) (7,714) Proceeds from issuance of equity (316) (1,443) - (1,525) Prepayments of long-term debt 3,393 - - 1,047 Other - - - - Total cash burn (1) (2,442)$ (2,763)$ (4,012)$ (5,296)$ Days in period 90 92 92 91 Average daily cash burn (27)$ (30)$ (44)$ (58)$ Note: Amounts may not recalculate due to rounding. (1) The Company's average daily cash burn is presented in the table below, which is a non-GAAP measure that management believes is useful information to investors and others in evaluating the Company's liquidity position and cash flows from its core operating performance. The Company defines cash burn as net cash provided by (used in) operating activities, net cash provided by (used in) investing activities and net cash provided by (used in) financing activities, adjusted for (1) Payroll Support Program financial assistance, (2) net purchases (proceeds from sale) of short-term investments and restricted short-term investments, (3) proceeds from issuance of long-term debt, net of deferred financing costs, but excluding aircraft financing, (4) proceeds from issuance of equity, (5) prepayments of long-term debt and (6) other cash flows that are not representative of the Company's core operating performance. This non-GAAP measure 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. Of the total cash burn for each of the three months ended March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, approximately $660 million, $515 million, $540 million and $505 million were cash payments for debt amortization, respectively, and approximately $170 million, $195 million, $120 million and $50 million were cash payments for salary and medical costs principally for the Company's voluntary early retirement programs, respectively, totaling an equivalent of approximately $9 million, $8 million, $8 million and $6 million per day, respectively. (in millions, except days in period)
22
Exhibit 99.3
Investor Relations Update
April 22, 2021
General Overview
| ● | Capacity - The Company expects its second quarter capacity to be down approximately 20% to 25% versus the second quarter 2019. | ||||
| ● | Revenue - The Company expects its second quarter total revenue to be down approximately 40% versus the second quarter 2019. | ||||
| ● | CASM1 - The Company expects its second quarter total cost per available seat mile (CASM) excluding fuel and net special items2 to be up between 13% and 17% versus the second quarter 2019. | ||||
| ● | Fuel - Based on the April 21, 2021 forward curve, the Company expects to pay an average of between $1.84 and $1.89 per gallon of total jet fuel (including taxes) in the second quarter. The Company also expects to consume approximately 873 million gallons of jet fuel based on its current capacity plans. | ||||
| ● | Liquidity - As of March 31, 2021, the Company had approximately $17.3 billion in total available liquidity. The Company’s total liquidity is comprised of unrestricted cash and investments of $14.0 billion and $3.3 billion of aggregate undrawn revolver capacity and other undrawn facilities. The Company also had a restricted cash position of $806 million. Based on current projections, the Company expects to end the second quarter with approximately $19.5 billion in total available liquidity. | ||||
| ● | Capital Expenditures - The Company expects to have a net capex inflow of $0.1 billion in 2021 driven by $1 billion of cash inflows for aircraft capex and associated financing primarily due to the return of certain pre-delivery payments, offset in part by $0.9 billion in non-aircraft capex outflows. | ||||
| ● | Non-operating Expense - The Company expects its total non-operating expense to be approximately $385 million in the second quarter. | ||||
| ● | Taxes - The Company expects to record an income tax benefit at an effective rate of approximately 22% in the second quarter. | ||||
| ● | Shares outstanding - The Company currently expects its basic and diluted shares outstanding3 for the second quarter to be approximately 634.7 million for financial reporting purposes. | ||||
| ● | Pre-tax margin - Based on the assumptions outlined above, the Company presently expects its second quarter pre-tax margin excluding net special items to be approximately -27% to -30%2. | ||||
Notes:
| 1. | All CASM guidance excludes the impact of fuel and net special items. | ||||
| 2. | The Company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of net special items cannot be determined at this time. | ||||
| 3. | Shares outstanding assumes no additional shares issued through the Company’s existing at the market share issuance authorization or otherwise. | ||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
Financial Update
April 22, 2021
2Q21 Guidance1,2 | |||||
| Total revenue | ~ -40% (vs 2Q19) | ||||
| Available seat miles (ASMs) (bil) | ~ -20% to -25% (vs 2Q19) to ~55.6 bil ASMs | ||||
| CASM excluding fuel and net special items | ~ +13% to +17% (vs 2Q19) | ||||
| Average fuel price (incl. taxes) ($/gal) | ~ $1.84 to $1.89 | ||||
| Fuel gallons consumed (mil) | ~ 873 | ||||
Other nonoperating expense ($ mil) | ~ 385 | ||||
| Capital Expenditures ($ mil) | FY 2021 | ||||
| Aircraft, net | ($1,000) | ||||
| Non-aircraft | 900 | ||||
| Total inflow | ($100) | ||||
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. | Numbers may not recalculate due to rounding. | ||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
GAAP to Non-GAAP Reconciliation
April 22, 2021
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 table below presents the reconciliation of total operating costs (GAAP measure) to total operating costs excluding fuel and net special items (non-GAAP measure). Management uses total operating costs excluding fuel and net special items 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.
American Airlines Group Inc. GAAP to Non-GAAP Reconciliation1 ($ mil except ASM and CASM data) | |||||||||||
| 2Q21 Range | |||||||||||
| Low | High | ||||||||||
| Total operating expenses | $ | 8,731 | $ | 9,027 | |||||||
| Less fuel expense | 1,606 | 1,650 | |||||||||
| Less operating net special items | — | — | |||||||||
| Total operating expense excluding fuel and net special items (Non-GAAP) | 7,125 | 7,377 | |||||||||
| Total CASM (cts) | 15.70 | 16.24 | |||||||||
| Total CASM excluding fuel and net special items (Non-GAAP) (cts) | 12.81 | 13.27 | |||||||||
| YOY (%) | 13.0 | % | 17.0 | % | |||||||
| Total ASMs (bil) | 55.6 | 55.6 | |||||||||
| Note: 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, special credits related to the Payroll Support Program Financial Assistance grant proceeds. | ||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
Forward Looking Statements
April 22, 2021
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 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, the continuing availability of borrowings under revolving lines of credit, 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 herein as well as in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (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 the 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.
Please refer to the footnotes and the forward looking statements page of this document for additional information