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): October 20, 2022
(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 | ||||||||||||
— | (1) | |||||||||||||
(1) Attached to the Common Stock
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 October 20, 2022, American Airlines Group Inc. (the Company, we, us and our) issued a press release reporting financial results for the three and nine months ended September 30, 2022. The press release is furnished as Exhibit 99.1 to this report.
| ITEM 7.01. | REGULATION FD DISCLOSURE. | ||||
On October 20, 2022, the Company provided a presentation to investors. This investor presentation is located on the Company’s website at www.aa.com under “Investor Relations” and is furnished as Exhibit 99.2 to this report.
Also on October 20, 2022, the Company provided an update for investors presenting information relating to its financial and operational outlook for the fourth quarter of 2022. This investor update is located on the Company’s website at www.aa.com under “Investor Relations” and is furnished as Exhibit 99.3 to this report.
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: October 20, 2022 | By: | /s/ Derek J. Kerr | |||||||||
| Derek J. Kerr | |||||||||||
Vice Chair, Chief Financial Officer and President, American Eagle | |||||||||||
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: October 20, 2022 | By: | /s/ Derek J. Kerr | |||||||||
| Derek J. Kerr | |||||||||||
Vice Chair, Chief Financial Officer and President, American Eagle | |||||||||||
Exhibit 99.1
 | Corporate Communications | |||||||
| mediarelations@aa.com | ||||||||
| Investor Relations | ||||||||
| investor.relations@aa.com | ||||||||
FOR RELEASE: Thursday, Oct. 20, 2022
AMERICAN AIRLINES REPORTS THIRD-QUARTER 2022 FINANCIAL RESULTS
FORT WORTH, Texas –– American Airlines Group Inc. (NASDAQ: AAL) today reported its third-quarter 2022 financial results, including:
•Third-quarter net income of $483 million, or $0.69 per diluted share. Excluding net special items1, third-quarter net income of $478 million, or $0.69 per diluted share.
•Record quarterly revenue of $13.5 billion, which represents a 13% increase over the same period in 2019, despite flying 9.6% less capacity.
•Ended the third quarter with $14.3 billion of total available liquidity, more than double the total available liquidity at year-end 2019.
•Company continues to execute on its plan to pay down approximately $15 billion of total debt2 by the end of 2025.
“The American Airlines team continues to deliver on our goals of running a reliable operation and returning to profitability,” said American’s CEO Robert Isom. “Demand remains strong, and it’s clear that customers in the U.S. and other parts of the world continue to value air travel and the ability to reconnect post-pandemic. American has the youngest, most fuel-efficient fleet among U.S. network carriers, and we are well-positioned for the future because of the incredible efforts of our team.”
Running a reliable operation
In the third quarter, American flew a schedule that was more than 25% larger than its closest competitor as measured by total departures. American and its regional partners operated more than 500,000 flights in the quarter, with an average load factor of 85.3%, which is 6.6 points higher than the third quarter of 2021. Despite a challenging operating environment — with hurricanes in Florida and the Caribbean and flooding in Dallas-Fort Worth — American restored its operating reliability to pre-pandemic levels in the third quarter. American has delivered a record on-time arrival rate and completion factor so far in October, and expects to carry this momentum through the upcoming holiday season and beyond.
American is proud to offer customers the largest network of any U.S. airline, with an expected average of more than 5,100 daily departures for the remainder of the year.
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 2
Returning to profitability
American produced revenues of $13.5 billion in the third quarter, a 13% increase versus 2019 and a record for any quarter in company history. This record revenue was achieved while flying 9.6% less capacity than the same period in 2019. The company produced an operating margin excluding net special items of 7.2% in the quarter.
Demand for domestic and short-haul international travel remains very strong, and the airline expects further improvement in demand for long-haul international travel as travel restrictions and testing requirements are lifted around the globe.
Liquidity and balance sheet
American ended the third quarter with $14.3 billion of total available liquidity, comprising cash and short-term investments plus undrawn capacity under revolving and other credit facilities. Total debt reduction continues to be a top priority, and the company remains on track to reduce total debt levels by $15 billion by the end of 2025.
In the third quarter, the company made approximately $380 million in scheduled debt and finance lease payments. As of Sept. 30, 2022, American had reduced its total debt by $5.6 billion from peak levels in the second quarter of 2021.
Guidance and investor update
American will continue to match its forward capacity with the resources required to support its operation. Based on current trends, the company expects its fourth-quarter total revenue to be 11% to 13% higher versus the fourth quarter of 2019 on 5% to 7% lower capacity. With these demand trends and the current fuel price forecast and excluding the impact of special items, the company expects to produce an operating margin3 of between 5.5% and 7.5% in the fourth quarter. Based on today's guidance, American expects its fourth-quarter 2022 earnings per diluted share excluding net special items3 to be between $0.50 and $0.70.
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 also 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. CT 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 Nov. 20.
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 $18 million of pre-tax net special credits in the third quarter of 2022, which principally included $57 million of nonoperating special credits for mark-to-market net unrealized gains associated with certain equity investments, offset in part by $39 million of operating net special charges.
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 3
2.All references to total debt include debt, finance leases, operating lease liability and pension obligations.
3.Operating margin and earnings per diluted share guidance excludes the impact of 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.
About American Airlines Group
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 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 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 September 30, 2022 (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 Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 4
American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
| 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||||||||
| Passenger | $ | 12,396 | $ | 7,957 | 55.8 | $ | 32,438 | $ | 17,682 | 83.5 | |||||||||||||||||||||||||
| Cargo | 279 | 332 | (15.9) | 970 | 973 | (0.3) | |||||||||||||||||||||||||||||
| Other | 787 | 680 | 15.8 | 2,375 | 1,800 | 31.9 | |||||||||||||||||||||||||||||
| Total operating revenues | 13,462 | 8,969 | 50.1 | 35,783 | 20,455 | 74.9 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes | 3,847 | 1,952 | 97.1 | 10,369 | 4,596 | nm | |||||||||||||||||||||||||||||
| Salaries, wages and benefits | 3,384 | 3,018 | 12.1 | 9,773 | 8,611 | 13.5 | |||||||||||||||||||||||||||||
| Regional expenses: | |||||||||||||||||||||||||||||||||||
| Regional operating expenses | 1,093 | 809 | 35.1 | 3,058 | 1,912 | 59.9 | |||||||||||||||||||||||||||||
| Regional depreciation and amortization | 81 | 78 | 3.7 | 240 | 236 | 1.7 | |||||||||||||||||||||||||||||
| Maintenance, materials and repairs | 685 | 548 | 25.1 | 1,949 | 1,383 | 40.9 | |||||||||||||||||||||||||||||
| Other rent and landing fees | 710 | 694 | 2.3 | 2,081 | 1,950 | 6.8 | |||||||||||||||||||||||||||||
| Aircraft rent | 347 | 358 | (3.0) | 1,045 | 1,064 | (1.8) | |||||||||||||||||||||||||||||
| Selling expenses | 495 | 318 | 55.7 | 1,331 | 745 | 78.7 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 491 | 480 | 2.1 | 1,486 | 1,439 | 3.2 | |||||||||||||||||||||||||||||
| Special items, net | 37 | (990) | nm | (1) | 189 | (3,986) | nm | ||||||||||||||||||||||||||||
| Other | 1,362 | 1,109 | 22.9 | 4,037 | 2,784 | 45.1 | |||||||||||||||||||||||||||||
| Total operating expenses | 12,532 | 8,374 | 49.7 | 35,558 | 20,734 | 71.5 | |||||||||||||||||||||||||||||
| Operating income (loss) | 930 | 595 | 56.3 | 225 | (279) | nm | |||||||||||||||||||||||||||||
| Nonoperating income (expense): | |||||||||||||||||||||||||||||||||||
| Interest income | 70 | 5 | nm | 107 | 13 | nm | |||||||||||||||||||||||||||||
| Interest expense, net | (499) | (476) | 4.8 | (1,430) | (1,332) | 7.4 | |||||||||||||||||||||||||||||
| Other income, net | 157 | 82 | 91.1 | 274 | 241 | 14.1 | |||||||||||||||||||||||||||||
| Total nonoperating expense, net | (272) | (389) | (30.0) | (1,049) | (1,078) | (2.7) | |||||||||||||||||||||||||||||
| Income (loss) before income taxes | 658 | 206 | nm | (824) | (1,357) | (39.3) | |||||||||||||||||||||||||||||
| Income tax provision (benefit) | 175 | 37 | nm | (148) | (296) | (49.7) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 483 | $ | 169 | nm | $ | (676) | $ | (1,061) | (36.3) | |||||||||||||||||||||||||
| Earnings (loss) per common share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.74 | $ | 0.26 | $ | (1.04) | $ | (1.65) | |||||||||||||||||||||||||||
| Diluted | $ | 0.69 | $ | 0.25 | $ | (1.04) | $ | (1.65) | |||||||||||||||||||||||||||
| Weighted average shares outstanding (in thousands): | |||||||||||||||||||||||||||||||||||
| Basic | 650,586 | 648,564 | 650,145 | 642,432 | |||||||||||||||||||||||||||||||
| Diluted | 715,985 | 721,142 | 650,145 | 642,432 | |||||||||||||||||||||||||||||||
Note: Percent change may not recalculate due to rounding.
(1)Not meaningful or greater than 100% change.
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 5
American Airlines Group Inc.
Consolidated Operating Statistics (1)
(Unaudited)
| 3 Months Ended September 30, | Increase (Decrease) | 9 Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 58,499 | 48,069 | 21.7 % | 160,305 | 112,555 | 42.4 % | |||||||||||||||||||||||||||||
| Available seat miles (ASM) (millions) | 68,567 | 61,111 | 12.2 % | 194,264 | 153,431 | 26.6 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 85.3 | 78.7 | 6.6 pts | 82.5 | 73.4 | 9.1 pts | |||||||||||||||||||||||||||||
| Yield (cents) | 21.19 | 16.55 | 28.0 % | 20.23 | 15.71 | 28.8 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 18.08 | 13.02 | 38.8 % | 16.70 | 11.52 | 44.9 % | |||||||||||||||||||||||||||||
| Total revenue per ASM (cents) | 19.63 | 14.68 | 33.8 % | 18.42 | 13.33 | 38.2 % | |||||||||||||||||||||||||||||
| Cargo ton miles (millions) | 478 | 510 | (6.2) % | 1,514 | 1,597 | (5.2) % | |||||||||||||||||||||||||||||
| Cargo yield per ton mile (cents) | 58.30 | 65.02 | (10.3) % | 64.07 | 60.94 | 5.1 % | |||||||||||||||||||||||||||||
| Fuel consumption (gallons in millions) | 1,031 | 941 | 9.5 % | 2,922 | 2,393 | 22.1 % | |||||||||||||||||||||||||||||
| Average aircraft fuel price including related taxes (dollars per gallon) | 3.73 | 2.07 | 79.9 % | 3.55 | 1.92 | 84.8 % | |||||||||||||||||||||||||||||
| Operating cost per ASM (cents) | 18.28 | 13.70 | 33.4 % | 18.30 | 13.51 | 35.5 % | |||||||||||||||||||||||||||||
| Operating cost per ASM excluding net special items (cents) | 18.22 | 15.43 | 18.1 % | 18.21 | 16.40 | 11.0 % | |||||||||||||||||||||||||||||
| Operating cost per ASM excluding net special items and fuel (cents) | 12.61 | 12.24 | 3.0 % | 12.87 | 13.41 | (4.0) % | |||||||||||||||||||||||||||||
| Passenger enplanements (thousands) | 52,564 | 48,129 | 9.2 % | 148,353 | 116,384 | 27.5 % | |||||||||||||||||||||||||||||
| Departures (thousands): | |||||||||||||||||||||||||||||||||||
| Mainline | 273 | 245 | 11.6 % | 775 | 618 | 25.4 % | |||||||||||||||||||||||||||||
| Regional | 228 | 263 | (13.4) % | 702 | 696 | 0.8 % | |||||||||||||||||||||||||||||
| Total | 501 | 508 | (1.3) % | 1,477 | 1,314 | 12.4 % | |||||||||||||||||||||||||||||
| Average stage length (miles): | |||||||||||||||||||||||||||||||||||
| Mainline | 1,175 | 1,171 | 0.4 % | 1,172 | 1,180 | (0.7) % | |||||||||||||||||||||||||||||
| Regional | 476 | 482 | (1.3) % | 479 | 489 | (1.9) % | |||||||||||||||||||||||||||||
| Total | 857 | 814 | 5.3 % | 842 | 813 | 3.6 % | |||||||||||||||||||||||||||||
| Aircraft at end of period: | |||||||||||||||||||||||||||||||||||
Mainline (2) | 908 | 857 | 6.0 % | 908 | 857 | 6.0 % | |||||||||||||||||||||||||||||
Regional (3) | 553 | 557 | (0.7) % | 553 | 557 | (0.7) % | |||||||||||||||||||||||||||||
| Total | 1,461 | 1,414 | 3.3 % | 1,461 | 1,414 | 3.3 % | |||||||||||||||||||||||||||||
| Full-time equivalent employees at end of period: | |||||||||||||||||||||||||||||||||||
| Mainline | 102,200 | 94,000 | 8.7 % | 102,200 | 94,000 | 8.7 % | |||||||||||||||||||||||||||||
Regional (4) | 27,500 | 25,800 | 6.6 % | 27,500 | 25,800 | 6.6 % | |||||||||||||||||||||||||||||
| Total | 129,700 | 119,800 | 8.3 % | 129,700 | 119,800 | 8.3 % | |||||||||||||||||||||||||||||
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 14 Boeing 737-800 mainline aircraft that are in temporary storage at September 30, 2022.
(3)Includes aircraft owned and leased by American as well as aircraft operated by third-party regional carriers under capacity purchase agreements. Excludes 30 Embraer 145, 13 Bombardier CRJ 700, five Bombardier CRJ 900 and five Embraer 170 regional aircraft that are in temporary storage at September 30, 2022.
(4)Regional full-time equivalent employees only include our wholly-owned regional airline subsidiaries.
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 6
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
| 3 Months Ended September 30, | Increase (Decrease) | 9 Months Ended September 30, | Increase (Decrease) | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
Domestic (1) | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 39,226 | 38,869 | 0.9 % | 111,346 | 92,277 | 20.7 % | |||||||||||||||||||||||||||||
| Available seat miles (ASM) (millions) | 45,686 | 46,505 | (1.8) % | 131,507 | 115,494 | 13.9 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 85.9 | 83.6 | 2.3 pts | 84.7 | 79.9 | 4.8 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 8,786 | 6,547 | 34.2 % | 23,966 | 14,646 | 63.6 % | |||||||||||||||||||||||||||||
| Yield (cents) | 22.40 | 16.84 | 33.0 % | 21.52 | 15.87 | 35.6 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 19.23 | 14.08 | 36.6 % | 18.22 | 12.68 | 43.7 % | |||||||||||||||||||||||||||||
Latin America (2) | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 8,012 | 5,759 | 39.1 % | 24,088 | 15,306 | 57.4 % | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 9,166 | 7,733 | 18.5 % | 29,278 | 24,059 | 21.7 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 87.4 | 74.5 | 12.9 pts | 82.3 | 63.6 | 18.7 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 1,596 | 957 | 66.8 % | 4,357 | 2,375 | 83.5 % | |||||||||||||||||||||||||||||
| Yield (cents) | 19.92 | 16.62 | 19.9 % | 18.09 | 15.52 | 16.6 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 17.41 | 12.38 | 40.7 % | 14.88 | 9.87 | 50.8 % | |||||||||||||||||||||||||||||
| Atlantic | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 10,623 | 3,163 | nm | 23,273 | 4,302 | nm | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 12,945 | 6,035 | nm | 30,955 | 11,222 | nm | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 82.1 | 52.4 | 29.7 pts | 75.2 | 38.3 | 36.9 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 1,901 | 408 | nm | 3,848 | 555 | nm | |||||||||||||||||||||||||||||
| Yield (cents) | 17.89 | 12.90 | 38.7 % | 16.53 | 12.90 | 28.2 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 14.68 | 6.76 | nm | 12.43 | 4.94 | nm | |||||||||||||||||||||||||||||
| Pacific | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 638 | 278 | nm | 1,598 | 670 | nm | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 770 | 838 | (8.2) % | 2,524 | 2,656 | (5.0) % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 82.9 | 33.1 | 49.8 pts | 63.3 | 25.2 | 38.1 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 113 | 45 | nm | 267 | 106 | nm | |||||||||||||||||||||||||||||
| Yield (cents) | 17.74 | 16.35 | 8.5 % | 16.66 | 15.85 | 5.1 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 14.71 | 5.42 | nm | 10.55 | 4.00 | nm | |||||||||||||||||||||||||||||
| Total International | |||||||||||||||||||||||||||||||||||
| Revenue passenger miles (millions) | 19,273 | 9,200 | nm | 48,959 | 20,278 | nm | |||||||||||||||||||||||||||||
| Available seat miles (millions) | 22,881 | 14,606 | 56.7 % | 62,757 | 37,937 | 65.4 % | |||||||||||||||||||||||||||||
| Passenger load factor (percent) | 84.2 | 63.0 | 21.2 pts | 78.0 | 53.5 | 24.5 pts | |||||||||||||||||||||||||||||
| Passenger revenue (dollars in millions) | 3,610 | 1,410 | nm | 8,472 | 3,036 | nm | |||||||||||||||||||||||||||||
| Yield (cents) | 18.73 | 15.33 | 22.2 % | 17.30 | 14.97 | 15.6 % | |||||||||||||||||||||||||||||
| Passenger revenue per ASM (cents) | 15.78 | 9.66 | 63.4 % | 13.50 | 8.00 | 68.7 % | |||||||||||||||||||||||||||||
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 Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 7
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:
–Operating Income (Loss) (GAAP measure) to Operating Income (Loss) Excluding Net Special Items (non-GAAP measure)
–Operating Margin (GAAP measure) to Operating Margin Excluding Net Special Items (non-GAAP measure)
–Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (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 Income (Loss) (GAAP measure) to Net Income (Loss) Excluding Net Special Items (non-GAAP measure)
–Basic and Diluted Earnings (Loss) Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share 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) and total operating costs per ASM (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM 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 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 Operating Income (Loss) Excluding Net Special Items | 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||||||||||||||||
| Operating income (loss) as reported | $ | 930 | $ | 595 | $ | 225 | $ | (279) | ||||||||||||||||||||||||||||||
| Operating net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | 37 | (990) | 189 | (3,986) | ||||||||||||||||||||||||||||||||||
Regional operating special items, net (2) | 2 | (67) | 2 | (449) | ||||||||||||||||||||||||||||||||||
| Operating income (loss) excluding net special items | $ | 969 | $ | (462) | nm | $ | 416 | $ | (4,714) | nm | ||||||||||||||||||||||||||||
| Calculation of Operating Margin | ||||||||||||||||||||||||||||||||||||||
| Operating income (loss) as reported | $ | 930 | $ | 595 | $ | 225 | $ | (279) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,462 | $ | 8,969 | $ | 35,783 | $ | 20,455 | ||||||||||||||||||||||||||||||
| Operating margin | 6.9 | % | 6.6 | % | 0.6 | % | (1.4 | %) | ||||||||||||||||||||||||||||||
| Calculation of Operating Margin Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Operating income (loss) excluding net special items | $ | 969 | $ | (462) | $ | 416 | $ | (4,714) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,462 | $ | 8,969 | $ | 35,783 | $ | 20,455 | ||||||||||||||||||||||||||||||
| Operating margin excluding net special items | 7.2 | % | (5.2 | %) | 1.2 | % | (23.0 | %) | ||||||||||||||||||||||||||||||
| Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) as reported | $ | 658 | $ | 206 | $ | (824) | $ | (1,357) | ||||||||||||||||||||||||||||||
| Pre-tax net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | 37 | (990) | 189 | (3,986) | ||||||||||||||||||||||||||||||||||
Regional operating special items, net (2) | 2 | (67) | 2 | (449) | ||||||||||||||||||||||||||||||||||
Nonoperating special items, net (3) | (57) | 18 | 34 | 31 | ||||||||||||||||||||||||||||||||||
| Total pre-tax net special items | (18) | (1,039) | 225 | (4,404) | ||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) excluding net special items | $ | 640 | $ | (833) | nm | $ | (599) | $ | (5,761) | (89.6%) | ||||||||||||||||||||||||||||
| Calculation of Pre-Tax Margin | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) as reported | $ | 658 | $ | 206 | $ | (824) | $ | (1,357) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,462 | $ | 8,969 | $ | 35,783 | $ | 20,455 | ||||||||||||||||||||||||||||||
| Pre-tax margin | 4.9 | % | 2.3 | % | (2.3 | %) | (6.6 | %) | ||||||||||||||||||||||||||||||
| Calculation of Pre-Tax Margin Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Pre-tax income (loss) excluding net special items | $ | 640 | $ | (833) | $ | (599) | $ | (5,761) | ||||||||||||||||||||||||||||||
| Total operating revenues as reported | $ | 13,462 | $ | 8,969 | $ | 35,783 | $ | 20,455 | ||||||||||||||||||||||||||||||
| Pre-tax margin excluding net special items | 4.8 | % | (9.3 | %) | (1.7 | %) | (28.2 | %) | ||||||||||||||||||||||||||||||
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 8
| Reconciliation of Net Income (Loss) Excluding Net Special Items | 3 Months Ended September 30, | Percent Increase (Decrease) | 9 Months Ended September 30, | Percent Increase (Decrease) | ||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| (in millions, except share and per share amounts) | (in millions, except share and per share amounts) | |||||||||||||||||||||||||||||||||||||
| Net income (loss) as reported | $ | 483 | $ | 169 | $ | (676) | $ | (1,061) | ||||||||||||||||||||||||||||||
| Net special items: | ||||||||||||||||||||||||||||||||||||||
Total pre-tax net special items (1), (2), (3) | (18) | (1,039) | 225 | (4,404) | ||||||||||||||||||||||||||||||||||
| Income tax special items, net | — | — | (9) | — | ||||||||||||||||||||||||||||||||||
| Net tax effect of net special items | 13 | 229 | (39) | 991 | ||||||||||||||||||||||||||||||||||
| Net income (loss) excluding net special items | $ | 478 | $ | (641) | nm | $ | (499) | $ | (4,474) | (88.9%) | ||||||||||||||||||||||||||||
| Reconciliation of Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) excluding net special items | $ | 478 | $ | (641) | $ | (499) | $ | (4,474) | ||||||||||||||||||||||||||||||
| Shares used for computation (in thousands): | ||||||||||||||||||||||||||||||||||||||
| Basic | 650,586 | 648,564 | 650,145 | 642,432 | ||||||||||||||||||||||||||||||||||
| Diluted | 715,985 | 648,564 | 650,145 | 642,432 | ||||||||||||||||||||||||||||||||||
| Earnings (loss) per share excluding net special items: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.73 | $ | (0.99) | $ | (0.77) | $ | (6.96) | ||||||||||||||||||||||||||||||
| Diluted | $ | 0.69 | $ | (0.99) | $ | (0.77) | $ | (6.96) | ||||||||||||||||||||||||||||||
| Reconciliation of Total Operating Costs per ASM Excluding Net Special Items and Fuel | ||||||||||||||||||||||||||||||||||||||
| Total operating expenses as reported | $ | 12,532 | $ | 8,374 | $ | 35,558 | $ | 20,734 | ||||||||||||||||||||||||||||||
| Operating net special items: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | (37) | 990 | (189) | 3,986 | ||||||||||||||||||||||||||||||||||
Regional operating special items, net (2) | (2) | 67 | (2) | 449 | ||||||||||||||||||||||||||||||||||
| Total operating expenses excluding net special items | 12,493 | 9,431 | 35,367 | 25,169 | ||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes | (3,847) | (1,952) | (10,369) | (4,596) | ||||||||||||||||||||||||||||||||||
| Total operating expenses excluding net special items and fuel | $ | 8,646 | $ | 7,479 | $ | 24,998 | $ | 20,573 | ||||||||||||||||||||||||||||||
| (in cents) | (in cents) | |||||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM as reported | 18.28 | 13.70 | 18.30 | 13.51 | ||||||||||||||||||||||||||||||||||
| Operating net special items per ASM: | ||||||||||||||||||||||||||||||||||||||
Mainline operating special items, net (1) | (0.05) | 1.62 | (0.10) | 2.60 | ||||||||||||||||||||||||||||||||||
Regional operating special items, net (2) | — | 0.11 | — | 0.29 | ||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM excluding net special items | 18.22 | 15.43 | 18.21 | 16.40 | ||||||||||||||||||||||||||||||||||
| Aircraft fuel and related taxes per ASM | (5.61) | (3.19) | (5.34) | (3.00) | ||||||||||||||||||||||||||||||||||
| Total operating expenses per ASM excluding net special items and fuel | 12.61 | 12.24 | 12.87 | 13.41 | ||||||||||||||||||||||||||||||||||
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1)The 2022 nine month period mainline operating special items, net principally included a non-cash impairment charge to write down the carrying value of the Company's retired Airbus A330 fleet to the estimated fair value due to the market conditions for certain used aircraft. The Company retired its Airbus A330 fleet in 2020 as a result of the decline in demand for air travel due to the COVID-19 pandemic.
The 2021 third quarter mainline operating special items, net principally included $992 million of Payroll Support Program (PSP) financial assistance. The 2021 nine month period mainline operating special items, net principally included $4.2 billion of PSP financial assistance, offset in part by $168 million of salary and medical costs associated with certain team members who opted into voluntary early retirement programs offered as a result of reductions to the Company's operation due to the COVID-19 pandemic.
(2)The 2021 third quarter regional operating special items, net principally included $128 million of PSP financial assistance. The 2021 nine month period regional operating special items, net principally included $539 million of PSP financial assistance, offset in part by a $27 million non-cash impairment charge to write down regional aircraft resulting from the retirement of the remaining Embraer 140 fleet earlier than planned.
(3)Principally included mark-to-market net unrealized gains and losses associated with certain equity and other investments as well as non-cash charges associated with debt refinancings and extinguishments.
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 9
American Airlines Group Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)(Unaudited)
| 9 Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net cash provided by operating activities | $ | 2,331 | $ | 1,904 | |||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures, net of aircraft purchase deposit returns | (1,860) | (25) | |||||||||
| Airport construction projects, net of reimbursements | (274) | (110) | |||||||||
| Proceeds from sale-leaseback transactions | 46 | 168 | |||||||||
| Proceeds from sale of property and equipment | 37 | 181 | |||||||||
| Sales of short-term investments | 13,412 | 7,540 | |||||||||
| Purchases of short-term investments | (12,113) | (15,159) | |||||||||
| Decrease (increase) in restricted short-term investments | 41 | (330) | |||||||||
| Purchase of equity investments | (205) | — | |||||||||
| Other investing activities | — | 14 | |||||||||
| Net cash used in investing activities | (916) | (7,721) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on long-term debt and finance leases | (2,038) | (6,639) | |||||||||
| Proceeds from issuance of long-term debt | 699 | 12,096 | |||||||||
| Shares withheld for taxes pursuant to employee stock plans | (16) | (13) | |||||||||
| Deferred financing costs | (2) | (176) | |||||||||
| Proceeds from issuance of equity | — | 460 | |||||||||
| Other financing activities | 10 | 121 | |||||||||
| Net cash provided by (used in) financing activities | (1,347) | 5,849 | |||||||||
| Net increase in cash and restricted cash | 68 | 32 | |||||||||
| Cash and restricted cash at beginning of period | 408 | 399 | |||||||||
Cash and restricted cash at end of period (1) | $ | 476 | $ | 431 | |||||||
(1)The following table provides a reconciliation of cash and restricted cash to amounts reported within the condensed consolidated balance sheets:
| Cash | $ | 332 | $ | 293 | |||||||
| Restricted cash included in restricted cash and short-term investments | 144 | 138 | |||||||||
| Total cash and restricted cash | $ | 476 | $ | 431 | |||||||
American Airlines Reports Third-Quarter 2022 Financial Results
Oct. 20, 2022
Page 10
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions, except shares)
| September 30, 2022 | December 31, 2021 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | 332 | $ | 273 | |||||||
| Short-term investments | 10,900 | 12,158 | |||||||||
| Restricted cash and short-term investments | 953 | 990 | |||||||||
| Accounts receivable, net | 1,991 | 1,505 | |||||||||
| Aircraft fuel, spare parts and supplies, net | 2,215 | 1,795 | |||||||||
| Prepaid expenses and other | 986 | 615 | |||||||||
| Total current assets | 17,377 | 17,336 | |||||||||
| Operating property and equipment | |||||||||||
| Flight equipment | 39,154 | 37,856 | |||||||||
| Ground property and equipment | 9,696 | 9,335 | |||||||||
| Equipment purchase deposits | 643 | 517 | |||||||||
| Total property and equipment, at cost | 49,493 | 47,708 | |||||||||
| Less accumulated depreciation and amortization | (19,506) | (18,171) | |||||||||
| Total property and equipment, net | 29,987 | 29,537 | |||||||||
| Operating lease right-of-use assets | 7,549 | 7,850 | |||||||||
| Other assets | |||||||||||
| Goodwill | 4,091 | 4,091 | |||||||||
| Intangibles, net | 2,069 | 1,988 | |||||||||
| Deferred tax asset | 3,679 | 3,556 | |||||||||
| Other assets | 1,900 | 2,109 | |||||||||
| Total other assets | 11,739 | 11,744 | |||||||||
| Total assets | $ | 66,652 | $ | 66,467 | |||||||
| Liabilities and Stockholders’ Equity (Deficit) | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt and finance leases | $ | 2,749 | $ | 2,489 | |||||||
| Accounts payable | 2,117 | 1,772 | |||||||||
| Accrued salaries and wages | 1,662 | 1,489 | |||||||||
| Air traffic liability | 8,161 | 6,087 | |||||||||
| Loyalty program liability | 3,006 | 2,896 | |||||||||
| Operating lease liabilities | 1,467 | 1,507 | |||||||||
| Other accrued liabilities | 2,808 | 2,766 | |||||||||
| Total current liabilities | 21,970 | 19,006 | |||||||||
| Noncurrent liabilities | |||||||||||
| Long-term debt and finance leases, net of current maturities | 34,185 | 35,571 | |||||||||
| Pension and postretirement benefits | 4,601 | 5,053 | |||||||||
| Loyalty program liability | 6,141 | 6,239 | |||||||||
| Operating lease liabilities | 6,281 | 6,610 | |||||||||
| Other liabilities | 1,367 | 1,328 | |||||||||
| Total noncurrent liabilities | 52,575 | 54,801 | |||||||||
| Stockholders' equity (deficit) | |||||||||||
Common stock, 649,863,026 shares outstanding at September 30, 2022 | 6 | 6 | |||||||||
| Additional paid-in capital | 7,277 | 7,234 | |||||||||
| Accumulated other comprehensive loss | (5,862) | (5,942) | |||||||||
| Retained deficit | (9,314) | (8,638) | |||||||||
| Total stockholders' deficit | (7,893) | (7,340) | |||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 66,652 | $ | 66,467 | |||||||
2
3
• • • • 1/ See GAAP to non-GAAP reconciliation at the end of this presentation.
5 1/ Short-haul International consists of Mexico, Caribbean, Central America and northern South America. 2/ PRASM depicted. • •
6
7Note: May not recalculate due to rounding. 1/ See GAAP to non-GAAP reconciliation at the end of this presentation.
8 • 1/ Total available liquidity is defined as unrestricted cash and marketable securities plus available undrawn revolver capacity and other undrawn facilities.
• • • • • • 1/ Total debt includes debt, finance leases, operating lease liability and pension obligations.
Repaid 1/ Total debt includes debt, finance leases, operating lease liability and pension obligations. 2/ Source: Company filings, as of September 30, 2022. Amounts shown net of scheduled payments on amortizing debt. 3/ Source: Company filings, 2021 includes net inflows from return of PDPs. 10 •
11
13 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: - Operating Income (Loss) (GAAP measure) to Operating Income (Loss) Excluding Net Special Items (non-GAAP measure) - Operating Margin (GAAP measure) to Operating Margin Excluding Net Special Items (non-GAAP measure) - Pre-Tax Income (Loss) (GAAP measure) to Pre-Tax Income (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 Income (Loss) (GAAP measure) to Net Income (Loss) Excluding Net Special Items (non-GAAP measure) - Basic and Diluted Earnings (Loss) Per Share (GAAP measure) to Basic and Diluted Earnings (Loss) Per Share 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) and total operating costs per ASM (CASM) to CASM excluding net special items and fuel. Management uses total operating costs excluding net special items and fuel and CASM 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 fuel and net special items allows management an additional tool to understand and analyze the Company’s non-fuel costs and core operating performance.
14 Percent Increase Reconciliation of Net Income (Loss) Excluding Net Special Items 2022 2021 (Decrease) Net income (loss) as reported 483$ 169$ Net special items: Total pre-tax net special items (1), (2), (3) (18) (1,039) Income tax special items, net - - Net tax effect of net special items 13 229 Net income (loss) excluding net special items 478$ (641)$ nm Reconciliation of Basic and Diluted Earnings (Loss) Per Share Excluding Net Special Items Net income (loss) excluding net special items 478$ (641)$ Shares used for computation (in thousands): Basic 650,586 648,564 Diluted 715,985 648,564 Earnings (loss) per share excluding net special items: Basic 0.73$ (0.99)$ Diluted 0.69$ (0.99)$ Reconciliation of Total Operating Costs per ASM Excluding Net Special Items and Fuel Total operating expenses as reported 12,532$ 8,374$ Operating net special items: Mainline operating special items, net (1) (37) 990 Regional operating special items, net (2) (2) 67 Total operating expenses excluding net special items 12,493 9,431 Aircraft fuel and related taxes (3,847) (1,952) Total operating expenses excluding net special items and fuel 8,646$ 7,479$ Total operating expenses per ASM as reported 18.28 13.70 Operating net special items per ASM: Mainline operating special items, net (1) (0.05) 1.62 Regional operating special items, net (2) - 0.11 Total operating expenses per ASM excluding net special items 18.22 15.43 Aircraft fuel and related taxes per ASM (5.61) (3.19) Total operating expenses per ASM excluding net special items and fuel 12.61 12.24 Note: Amounts may not recalculate due to rounding. (in millions, except share and per share amounts) (in cents) 3 Months Ended September 30, FOOTNOTES: (1) (2) (3) The 2021 third quarter mainline operating special items, net principally included $992 million of Payroll Support Program (PSP) financial assistance. Principally included mark-to-market net unrealized gains and losses associated with certain equity and other investments as well as non-cash charges associated with debt refinancings and extinguishments. The 2021 third quarter regional operating special items, net principally included $128 million of PSP financial assistance. Percent Increase Reconciliation of Operating Income (Loss) Excluding Net Special Items 2022 2021 (Decrease) Operating income (loss) as reported 930$ 595$ Operating net special items: Mainline operating special items, net (1) 37 (990) Regional operating special items, net (2) 2 (67) Operating income (loss) excluding net special items $ 969 $ (462) nm Calculation of Operating Margin Operating income (loss) as reported $ 930 $ 595 Total operating revenues as reported $ 13,462 $ 8,969 Operating margin 6.9% 6.6% Calculation of Operating Margin Excluding Net Special Items Operating income (loss) excluding net special items $ 969 $ (462) Total operating revenues as reported $ 13,462 $ 8,969 Operating margin excluding net special items 7.2% (5.2%) Reconciliation of Pre-Tax Income (Loss) Excluding Net Special Items Pre-tax income (loss) as reported 658$ 206$ Pre-tax net special items: Mainline operating special items, net (1) 37 (990) Regional operating special items, net (2) 2 (67) Nonoperating special items, net (3) (57) 18 Total pre-tax net special items (18) (1,039) Pre-tax income (loss) excluding net special items 640$ (833)$ nm Calculation of Pre-Tax Margin Pre-tax income (loss) as reported $ 658 $ 206 Total operating revenues as reported $ 13,462 $ 8,969 Pre-tax margin 4.9% 2.3% Calculation of Pre-Tax Margin Excluding Net Special Items Pre-tax income (loss) excluding net special items $ 640 $ (833) Total operating revenues as reported $ 13,462 $ 8,969 Pre-tax margin excluding net special items 4.8% (9.3%) (in millions) 3 Months Ended September 30,
15
Exhibit 99.3
Investor Relations Update
October 20, 2022
General Overview
| ● | Capacity - The company expects its fourth quarter capacity to be down approximately 5% to 7% versus the fourth quarter of 2019. Based on current assumptions, the company now expects its full-year capacity to be down approximately 8% to 10% versus 2019. | ||||
| ● | Revenue - The company expects its fourth quarter total revenue to be approximately 11% to 13% higher versus the fourth quarter of 2019. The company expects total revenue per available seat mile (TRASM) to be 18% to 20% higher versus the fourth quarter of 2019. | ||||
| ● | CASM1 - The company expects its fourth quarter total cost per available seat mile (CASM) to be up between 8% and 10% versus the fourth quarter of 2019. Based on current capacity plans, the company expects its full-year CASM to be up approximately 11% to 13% versus 2019. | ||||
| ● | Fuel - Based on the October 12, 2022 forward fuel curve, the company expects to pay an average of between $3.51 and $3.56 per gallon of jet fuel (including taxes) in the fourth quarter. The company also expects to consume approximately 990 million gallons of jet fuel in the fourth quarter based on its current capacity plans. | ||||
| ● | Liquidity - As of September 30, 2022, the company had $14.3 billion in total available liquidity. The company’s total liquidity as of that date was comprised of unrestricted cash and investments of $11.2 billion and $2.8 billion of undrawn capacity under revolving credit facilities. The company also had $220 million in undrawn short-term revolving and other facilities. | ||||
| ● | Operating margin1 - The company expects to report an operating margin of approximately 5.5% to 7.5% in the fourth quarter. | ||||
| ● | Nonoperating expense1 - The company expects its total nonoperating expense to be approximately $335 million in the fourth quarter. | ||||
| ● | Taxes - The company expects to recognize a provision for income taxes at an effective rate of approximately 20% in the fourth quarter, which will be substantially non-cash. | ||||
| ● | Shares outstanding - The company currently expects its basic and diluted weighted average shares outstanding2 for financial reporting purposes to be approximately 650.9 million and 718.7 million, respectively, for the fourth quarter. | ||||
| ● | EPS1 - Based on the assumptions outlined above, the company presently expects fourth quarter earnings per diluted share excluding net special items of between $0.50 and $0.70. | ||||
Notes:
| 1. | All CASM guidance excludes the impact of fuel and net special items. All operating margin, nonoperating expense and earnings per diluted share guidance exclude the impact of net special items. The company is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of net special items cannot be determined at this time. Please see GAAP to non-GAAP reconciliation at the end of this document. | ||||
| 2. | Shares outstanding are based upon several estimates and assumptions, including average per share stock price and stock award activity and assumes no additional shares issued through the company’s existing at the market share issuance authorization or otherwise. The number of shares in actual calculations of earnings per share will likely be different from those set forth above. | ||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
Financial Update
October 20, 2022
4Q 20221,2 | ||||||||||||||||||||
| Available seat miles (ASMs) | ~ -5.0% to -7.0% (vs. 4Q19) | |||||||||||||||||||
| Total revenue | ~ +11.0% to +13.0% (vs. 4Q19) | |||||||||||||||||||
| TRASM | ~ +18.0% to +20.0% (vs. 4Q19) | |||||||||||||||||||
| CASM excluding fuel and net special items | ~ +8.0% to +10.0% (vs. 4Q19) | |||||||||||||||||||
| Average fuel price (incl. taxes) ($/gal) | ~ $3.51 to $3.56 | |||||||||||||||||||
| Fuel gallons consumed (mil) | ~ 990 | |||||||||||||||||||
Operating margin excluding net special items | ~ 5.5% to 7.5% | |||||||||||||||||||
| Other nonoperating expense excluding net special items ($ mil) | ~ 335 | |||||||||||||||||||
| Earnings per diluted share excluding net special items | $0.50 to $0.70 | |||||||||||||||||||
| 4Q 2022 Shares Forecast | ||||||||||||||||||||
Shares (mil)3 | ||||||||||||||||||||
| Earnings Level ($ mil) | Basic | Diluted | Addback ($ mil)4 | |||||||||||||||||
| Earnings above $140 | 650.9 | 718.7 | $ | 13 | ||||||||||||||||
| Earnings up to $140 | 650.9 | 657.0 | — | |||||||||||||||||
| Net loss | 650.9 | 650.9 | — | |||||||||||||||||
Notes:
| 1. | Includes guidance on certain non-GAAP measures, which exclude, among other things, 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. | ||||
| 3. | Shares outstanding are based upon several estimates and assumptions, including average per share stock price and stock award activity and assumes no additional shares issued through the company’s existing at the market share issuance authorization or otherwise. The number of shares in actual calculations of earnings per share will likely be different from those set forth above. | ||||
| 4. | Interest addback for earnings per share calculation for 6.5% convertible notes, net of estimated profit sharing, short-term incentive and tax effects. | ||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
GAAP to Non-GAAP Reconciliation
October 20, 2022
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) and total operating costs per ASM (CASM) to CASM excluding fuel and net special items. Management uses total operating costs excluding fuel and net special items and CASM 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 fuel and net special items allow management an additional tool to understand and analyze the company’s non-fuel costs and core operating performance.
| GAAP to Non-GAAP Reconciliation of Total Operating Costs and CASM ($ mil except ASM and CASM data) | |||||||||||
| 4Q22 Range | |||||||||||
| Low | High | ||||||||||
| Total operating expenses | $ | 11,655 | $ | 12,035 | |||||||
| Less fuel expense | 3,475 | 3,524 | |||||||||
| Less operating net special items | — | — | |||||||||
| Total operating expense excluding fuel and net special items (Non-GAAP) | $ | 8,180 | $ | 8,511 | |||||||
| Total CASM (cts) | 17.83 | 18.03 | |||||||||
| Total CASM excluding fuel and net special items (cts) (Non-GAAP) | 12.52 | 12.75 | |||||||||
| Percentage change compared to 4Q 2019 (%) | 8.0% | 10.0% | |||||||||
| Total ASMs (bil) | 65.4 | 66.8 | |||||||||
| Note: Amounts may not recalculate due to rounding. | |||||
Please refer to the footnotes and the forward looking statements page of this document for additional information
Forward Looking Statements
October 20, 2022
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 September 30, 2022 (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